Preliminary estimates by the Bank of Ghana have shown that real GDP growth in 2020 is likely to range between 2.0 and 2.5 per cent, and a recovery in real economic activity depends on an early containment of the spread of the COVID-19 pandemic, its Inflation Outlook Report has revealed.

According to the central bank, leading indicators of economic activity for the first quarter of 2020 suggest a slowdown.

This reflected the restrictions, social distancing and the partial lockdown measures introduced by the government in mid-March.

For instance, its Composite Index of Economic Activity (CIEA) indicated a 2.2 per cent contraction in economic activity compared to 5.6 per cent growth a year ago, and 14 per cent growth in December 2019.

The contraction in the CIEA was due to the sharp downturn in tourist arrivals, domestic VAT, cement sales, imports, and exports.

Meanwhile, provisional data for the first quarter 2020 on the execution of the budget show that revenue collections was lower than the target, on the back of declining customs collections and slower pace of direct revenue mobilisation.

Significant expenditure overruns were recorded, as most spending items markedly exceeded their targets, exacerbating the revenue problem.

The resulting fiscal deficit was financed from both domestic and foreign sources.

COVID-19 continues to exert significant pressures on fiscal policy with latest figures pointing to widening of the financing gap.