Ghana’s gross international reserves have shown significant growth in the first four months of 2024, reaching US$6.59 billion, which equates to three months of import cover.

This positive development was announced by the Governor of the Bank of Ghana, Dr Ernest Addison, during a press conference following a Monetary Policy Committee meeting.

Governor Addison reported that as of the end of April 2024, the gross international reserves had increased from US$5.91 billion at the end of December 2023, a substantial rise from the previous 2.7 months of import cover to the current 3.0 months. This growth highlights the strengthening of Ghana’s financial buffers against external shocks and reinforces the country’s economic stability.

In addition to the overall gross international reserves, reserves excluding encumbered and petroleum assets also saw an increase. By the end of April 2024, these reserves rose to US$4.32 billion, compared to US$3.66 billion at the end of December 2023. This improvement underscores the country’s enhanced capacity to support its currency and manage its international obligations effectively.

The increase in gross international reserves is a positive signal for Ghana’s economy, reflecting the country’s ability to bolster its financial stability amidst global economic uncertainties. This development is expected to boost investor confidence and provide a more favorable environment for economic growth and development.

Global Developments and Conditions

According to the BoG Governor, global economic activity remains resilient despite sustained monetary policy tightening across advanced economies and Emerging Market and Developing Economies. The global growth outturn of 3.2 percent in 2023, largely reflected stronger consumption spending due to employment growth, particularly in advanced economies, and policy support in China, U.S, and some larger Emerging Market and Developing Economies (EMDEs).

Other factors that further supported global activity in 2023, were additions to the stock of capital, a rebound in the manufacturing and services sector, improved trade, and resolution of pandemic era supply chain disruptions. In the outlook, IMF growth projections point to global growth remaining resilient at 3.2 percent in 2024 and 2025. Downside risks to the growth outlook include the observed slowdown in the disinflation process since early 2024, geopolitical uncertainty, and elevated debt burdens.

Global headline inflation remains above target in most countries. Progress towards inflation targets has somewhat stalled since the beginning of the year due to a resurgence in crude oil prices as OPEC+ slashed production and increasing prices in the services sector. This notwithstanding, inflation is projected to decline steadily on the back of tighter monetary policy, softening labour market conditions, and fading effects of past shocks.

Central Banks have remained cautious in lowering policy rates due to sluggishness of the disinflation process. Policy rates have been kept elevated to anchor inflation expectations and further drive down long-term inflation rates. Consequently, global financial conditions have generally remained restrictive. Longer-term bond yields have also risen, due to the expectation of maintenance of a still tight policy stance in the near-term. In the outlook, financial conditions are expected to ease in 2024 as the disinflation process continues and oil prices decline, amid well-anchored inflation expectations.

In the domestic economy, Dr Addison high frequency real sector indicators point to a sustained pickup in economic activity through the first quarter of 2024. The updated real Composite Index of Economic Activity recorded an annual growth of 2.1 percent in March 2024, compared to a contraction of 6.4 percent in the corresponding period of 2023.

The pick-up in the index was driven mainly by increased imports, private sector contributions to SSNIT, and tourist arrivals. Ghana’s Purchasing Managers’ Index (PMI) signalled an improvement in business activity. As the index rose to 51.3 in April 2024 from 50.9 in March due to improved consumer demand.