Consumer spending posts positive performance as VAT collections increase to GHS 571m
Consumer spending, proxied by domestic VAT collections and retail sales, posted a positive performance in January 2022, compared with the same period in 2021.
Domestic VAT collections increased by 8.3 percent on a year-on-year basis to GHS 571.46 million, but dipped by 15.9 percent on a month-on-month basis in January 2022 from GH¢679.11 million recorded in the preceding month.
Retail sales increased by 7.1 percent (year-on-year) to GHS 123.65 million in January 2022, up from GHS 115.47 million recorded in the same period in 2021. Compared to December 2021, however, retail sales declined by 45.1 percent.
The relative year-on-year improvement in retail sales reflected increased household consumption during the review period.
According to Fitch Solutions, consumer spending is expected to bounce back strongly this year driving economic growth by about 4.8%.
The agency is confident that majority of Ghana’s population will be vaccinated against the Covid-19 in 2022, a move that will lead to the further easing of restrictions [this has already taken pace given the President’s 28th Address on March 27].
In view of the posted positive consumer spending coupled with positive performances in other real sectors such as ports and harbours activity, manufacturing activities, industrial consumption of electricity, among others, the Bank’s updated Composite Index of Economic Activity (CIEA) recorded an annual growth of 4.2
percent in January 2022, compared with 13.9 percent recorded in the corresponding period of 2021.
However, consumer and business confidence surveys conducted in February 2022 in view of the CIEA, revealed a softening of sentiments with business confidence declining by a greater extent.
The Consumer Confidence Index eased from 88.1 in December 2021 to 87.4 in February 2022 on account of the persistent increases in fuel prices, increases in transportation fares and rising inflation.
Businesses were concerned about the impact of these on macroeconomic conditions as well as on their short-term targets and profitability for 2022. Consequently, the Business Confidence Index dipped from 98.4 in December 2021 to 88.8 in February 2022.
