BoG Report: Strong growth in domestic VAT collections and retail sales, but construction sector declines
According to the May 2023 Monetary Sector Report released by the Bank of Ghana, the first quarter of 2023 witnessed a mixed performance in the country’s real sector activities. The report provides comprehensive insights into various sectors of the economy, shedding light on both positive and negative trends that have emerged.
One notable positive aspect highlighted in the report is the significant increase in domestic Value Added Tax (VAT) collections. On a year-on-year basis, domestic VAT collections recorded a staggering surge of 92.4%, amounting to ¢1.250 billion, compared to ¢649.93 million during the corresponding period last year. Cumulatively, total domestic VAT for the first quarter of 2023 rose by an impressive 76.8% to reach ¢3,196 billion, up from ¢1.808 billion in the same period of the previous year.
The retail sector also exhibited strong growth, with retail sales experiencing a robust increase of 44.9% to ¢165.20 million in March 2023, as opposed to ¢114.05 million recorded during the same period in 2022. Furthermore, on a month-on-month basis, retail sales demonstrated an encouraging improvement of 19.2% in March 2023, compared to the preceding month. Overall, the first quarter of 2023 witnessed a cumulative increase of 30.3% in retail sales.
Another positive development highlighted in the report is the improvement in manufacturing activities. This was evident through the collection of direct taxes and private sector workers’ contributions to the Social Security and National Insurance Trust (SSNIT) Pension Scheme. Total direct taxes collected exhibited a year-on-year increase of 37.7% to ¢4.788 billion in March 2023, surpassing the ¢3.478 billion recorded during the same period in 2022. Additionally, private sector workers’ contributions to the SSNIT Pension Scheme (Tier-1) witnessed a noteworthy growth of 22.7% in year-on-year terms, reaching ¢317.61 million in March 2023, compared to ¢258.80 million during the corresponding period in 2022.
However, not all sectors experienced positive growth. The construction sub-sector faced a significant decline, as reflected by the volume of cement sales, which plummeted by 29.3%. In March 2023, total cement sales displayed a month-on-month improvement of 12.8% compared to February 2023. Nevertheless, the first quarter of 2023 witnessed a notable decline of 28.6% in cement sales, with total sales amounting to 715,070.24 tonnes, in contrast to 1,001,259.90 tonnes during the same period in 2022. The decline in cement sales was primarily attributed to a slowdown in construction activities throughout the review period.
The transport sector also experienced a downturn, with new vehicle registrations by the Driver and Vehicle Licensing Authority (DVLA) declining by 44.1% to 12,847 in March 2023, compared to the 22,978 vehicles registered during the corresponding period of 2022. Similarly, cumulative vehicle registrations for the first quarter of 2023 witnessed a substantial decrease of 45.2% to 54,568 vehicles, down from 99,514 recorded a year ago.
Despite the challenges faced by certain sectors, the report highlighted positive growth in passenger arrivals, indicating an encouraging trend in the transport sector. In March 2023, passenger arrivals demonstrated a remarkable increase of 33.8% in year-on-year terms, with 86,115 arrivals, compared to 64,358 arrivals during the same period a year ago. Moreover, compared to February 2023, passenger arrivals witnessed a significant upswing of 15.4%. Cumulatively, for the first quarter of 2023, Ghana recorded 247,834 arrivals at international airports and land borders, representing a growth of 44.8% in comparison to the 171,145 arrivals during the corresponding period in 2022.
While the real sector activities displayed mixed performance, international trade at the two main harbors, namely Tema and Takoradi, witnessed a decline. Laden container traffic for inbound and outbound containers decreased by 5.7% year-on-year in March 2023, totaling 53,615, compared to 56,879 in March 2022. The report attributed this relative decline in port activities to a slowdown in international trade amid ongoing geopolitical tensions, which have impacted trade volumes during the review period.
Furthermore, the report shed light on labor market dynamics, indicating a decline in labor demand. The number of jobs advertised in selected print and online media showed a decrease in April 2023 compared to the corresponding period in the previous year. A total of 2,581 job adverts were recorded, representing a decline of 7.1% in year-on-year terms, as compared to the 2,777 jobs advertised during the same period in 2022. On a month-on-month basis, the number of job vacancies also witnessed a decrease of 6.3% from the 2,754 jobs advertised in March 2023. Cumulatively, for the first four months of 2023, the total number of advertised jobs declined by 2.9% to 10,707, down from 11,029 during the same period in 2022.
In conclusion, the Bank of Ghana’s May 2023 Monetary Sector Report provides a comprehensive analysis of Ghana’s real sector activities in the first quarter of 2023. The report reveals a mixed performance across various sectors, with positive growth observed in domestic VAT collections, retail sales, and manufacturing activities. However, the construction sub-sector, vehicle registrations, international trade at harbors, and labor demand faced significant challenges. The report highlights both the opportunities and areas of concern within the Ghanaian economy, providing valuable insights for policymakers and stakeholders to make informed decisions moving forward.
