Oil output slump moves growth down in Q2
Reports released this week by the Ghana Statistical Service (GSS) shows the slowest pace of economic growth in the second quarter of 2016, since the third quarter of 2014. The latest sluggish growth rate follows reductions in mining and crude oil outputs.
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The Ghanaian economy expanded by 2.5 per cent but compares unfavourably to the 4.8 per cent growth in the first quarter of 2016. The dip was mainly due technical glitches on the economy’s main production vessel, the Floating Production Storage and Offloading (FPSO), which caused production to decline by 49 per cent; the industry sector as a result contracted by five per cent.
This comes in the wake of World Bank’s projection of a fall in the economic growth of Sub-Saharan Africa to 1.6 per cent, the lowest level in over two decades.
The agricultural and services sectors, however, expanded by 4.1 per cent and six per cent respectively. The government is, however, optimistic about the domestic economy’s outlook as it anticipates an expansion of 4.1 per cent to 4.3 per cent at the end of the year on the back of improved commodity exports and output from new oil projects.
Producer Price Inflation up
Producer inflation advanced to 11.1 per cent year-on-year in August from a revised 10.4 per cent in July, 2016.
The producer price captures the average change in the prices received by domestic producers for the production of their goods and services.
Gold output surges
Ghana, the second-largest gold miner after South Africa, witnessed a rise in its half year gold output. The economy’s gold output expanded by 38.6 per cent from 1,438,656 ounces in 2015 to 1,993,850 ounces in July 2016, as new mining concessions and gold prices bolstered operations.
The country, which mostly depends on revenue from commodity exports, earned about US$2.43 billion from gold in the first six months of year, compared with the receipt of US$1.75 billion in the same period last year.
IMF approves next BoP release
The International Monetary Fund (IMF) has approved the disbursement of the third tranche of the US$918 million deal to Ghana under its three-year austerity plan to stabilise the country’s microeconomic imbalances.
A vote of confidence in the government reviving the ailing economy at IMF’s recent review of the deal ensured the approval of US$116.2 million.
This projects positive outlook for the economy and is expected to boost investor confidence and attract more foreign investments.
Government treasuries
The 182-day treasury bill and the one-year treasury note witnessed marginal changes in their yields, but the yield on the 91-day treasury instrument remained unchanged at 22.87 per cent. The rate on the 182-day bill declined by one basis points (bps) to 24.69 per cent. The yield on the one-year treasury note also dipped by 25 bps to 23.25 per cent.
The government accepted all the bids tendered at last Friday’s treasury auctions, valued at GH¢1,409.93 million. The total amount, however, exceeded the GH¢1,251 million which the government targeted.
Government’s target for next week’s auction of the 91-day, 182-day treasury securities and the two-year treasury note is total of GH¢950 million.
Capital market
The equity market was unable to recover its losses as price declines weighed on the indices. The GSE-Composite Index shed 0.01 per cent to close at 1,774.90 points, while the GSE-Financial Stock Index declined by 0.01 per cent to end the week at 1,682.66 points.
The GSE-CI and the GSE-FSI closed with year-to-date losses of 11.03 per cent and 12.82 per cent respectively.
Total traded volume and value declined to 3.18 million shares and GH¢3.77 million respectively. Ghana Oil Company Limited emerged as the most active and liquid traded stock on the market, accounting for 82.49 per cent and 92.61 per cent of the total trading volume and value respectively. This resulted in a 0.09 per cent dip in market capitalisation from GH¢53,034.13 million to GH¢52,987.69 million.
Despite trading flat on Thursday, overall trading activities for the week buoyed up as investors cashed-in profit on GOIL. Six gainers and seven decliners were recorded in the week under review. Fan Milk Limited and Enterprise Ghana Limited added 2Gp to close at GH¢9.78 per share and at GH¢2.40 per share respectively.
EcoBank Ghana Limited, Produce Buying Company Limited, UT Bank Limited and Cocoa Producing Company Limited, all edged up a pesewa each to close the week’s trading.
On the other hand, Total Petroleum Limited emerged as the highest loser, dipping 10Gp to trade at GH¢2.40 per share. Tullow Oil Plc shed 5Gp to trade at GH¢26.90 per share.
Trust Bank Limited and Guinness Ghana Brewery Ltd trimmed 4Gp each to close at 26Gp per share and GH¢1.75 per share respectively.
Benso Oil Palm Plantation shed 2Gp while Ghana Oil Company Limited and GCB Bank Ltd lost 1Gp each to conclude the list of decliners for the week.
Currency market
The British Pound trended higher against the local currency after economic data showed improved economic growth, consumer spending and business investment sentiments which offset the effect of a growing trade deficit in the U.K.
The local currency slumped by 0.24 per cent to end the week’s forex trading at GH¢5.15 per pound, pitching its year-to-date depreciation at 8.27 per cent.
The Ghana cedi lost its grounds against the Euro despite skepticisms that Deutsche Bank mortgage issue could create a systemic crisis for the Eurozone. The Euro edged up by 0.11 per cent against the local currency to trade at GH¢4.45. With these improvements, the economic sentiment index rose to 104.9 in September, 2016.
The U.S dollar largely remained afloat forex market following improved economic data which buoyed expectations for a near term December rate hike. The local currency ended the week at an average rate of GH¢3.97 to the dollar.
Impressive consumer confidence, better-than-expected weekly jobless claims and growth in second quarter gross domestic product in the U.S led to the greenback rising by 0.18 per cent against the local currency with year-to-date appreciation of 4.65 per cent.
International Market Commodities
Crude oil saw price fluctuations ahead of the OPEC meeting but drawdown on U.S crude supplies steadied the price of the commodity. Brent crude upturned by 6.69 per cent to trade at US$48.97 after OPEC and Russia agreed on a production cut of 32.5 million barrels per day from the current production levels of around 33.24 million barrels per day.
Pessimism still clouds the atmosphere as to whether the planned output cut would make a substantial impression in the global oil glut.
With economic data bolstering prospects of December interest rate hikes in the U.S, gold price tumbled by 1.25 per cent to close last week’s trading at US$1,322.70. Demand for the yellow metal dulled, as US economic data bolstered a higher appetite for currency and stock trading over the precious metal.
The buoyancy in the price of cocoa diminished after heavy rains in top producer, Ivory Coast, reinforced expectations of global surplus of the commodity for the upcoming main crop 2016/2017 season.
However, the price of cocoa is expected to remain quite high as lack of sunshine could expose the crops to diseases and thereby threatening the 2016/17 supply outlook of the commodity. The soft crop edged down by 3.19 per cent to trade at US$2,761.
Coffee gained 0.03 per cent to trade at US$1.5145.