Declines in the volumes and prices of Ghana’s major commodities have adversely affected the trade balance in the first two months of the year, data from the Bank of Ghana has shown.

Total exports contracted by 9.2 percent year-on-year to US$2.5bn in the first two months of 2021, driven mainly by year-on-year declines of 25.8 percent and 5.6 percent in crude oil and gold exports respectively, due to lower volumes, and a 12.2 percent decline in cocoa beans exports, due to lower volumes and prices.

Governor of the Bank of Ghana, Dr. Ernest Addison, noted that while crude oil prices gained 12.6 percent in February to settle at an average price of US$62.3 per barrel compared to US$55.3 per barrel in January, gold prices suffered some losses due to the strengthening of the US dollar and rising US Treasury yields.

Gold prices declined by 3 percent in February to US$1,810.3 per ounce compared to US$1,867 per ounce in January.

Cocoa prices also declined marginally to US$2,508.8 per tonne in February compared to the US$2,523.9 per tonne a month earlier, due to the combination of weak demand caused by the pandemic and excess supply in Ivory Coast.

According to the central bank’s data, total imports went up by 9.6 percent to US$2.2bn, underpinned by a 12.9 percent year-on-year increase in non-oil imports due to a pick-up in economic activities.

Consequently, the trade balance recorded a lower surplus of US$339.7 million, equivalent to 0.5 percent of GDP, in the first two months of 2021 compared with US$791 million, equivalent to 1.2 percent of GDP, in the same period of 2020.

Although this may be a worrying sign that pressures could mount on the cedi’s exchange rate, some economists have indicated that the country still has a positive overall balance of payments, as its current account deficit of US$2.1bn is reversed by a US$2.9 billion positive balance in the capital and financial account.

The gross international reserves remained resilient at US$8.72 billion, providing cover for 4.2 months of imports of goods and services, compared with the end-December 2020 position of US$8.62 billion, equivalent to 4.1 months of import cover.

The reserves are projected to see a major boost from the upcoming US$5 billion Eurobond issuance.