Ghana’s economic woes largely caused by mismanagement than COVID-19’ – Economist

Uk Based Ghanaian Economist And Analytics Consultant Rexmond Thompson
Uk Based Ghanaian Economist And Analytics Consultant Rexmond Thompson

A UK based Ghanaian Economist and Analytics Consultant, Rexmond Thompson is asking Ghanaians to reduce blaming government for it’s role in the mismanagement of the country’s economy.

The economist noted that, the state of the country’s economy is due to an ongoing global economic shock which is also impacting negatively on the country’s exchange of goods and services.

He urged Ghanaians to rather support government in seeking financial assistance from the International Monetary Fund (IMF) to stabilise the country’s economy.

He said the Ghanaian economy has been going through challenges since the year 2020 till date.

This assertion is reflected in the country’s economic data. The economy contracted with a GDP growth rate of 0.514% in the year 2020.

But the slowdown in economic growth was short lived as government economic policies stimulated growth and expanded the economy with a growth rate of 5.356% in the year 2021.

The growth rate in 2021 was not sustained but declined to a growth rate of 3.589% in the year 2022 and the economy is projected to settle at a growth rate of 2.839% in the year 2023.

As the GDP keeps fluctuating, price instability poses a challenge for the government to address. In 2020, inflation was 10.473% and increased to 12.621% in 2021. This further increased to 31.678% in 2022 and currently hovering around 45% for the first quarter of 2023.
How did we get here in the first place as a nation? Is that the case that the economic managers of the country have failed? He queried.

According to the Economist, prior to the occurrence of the novel COVID-19 and Russia-Ukraine war, Ghana’s economy was one of the fastest growing economies in the world and Sub-Sahara Africa.

Ghana was indeed on the path to economic prosperity. The economy grew by 8.129% in 2017 and then settled on a growth rate of 6.2% and 6.508% in 2018 and 2019 respectively.

Looking at the growth rate for three years back from 2017 reveals a growth rate of 2.856% for 2014 which subsequently decreased to a growth rate of 2.121 in 2015 and slightly recovered to 3.373% in 2016. Inflation three years before COVID-19 was 12.372% in 2017 which was reduced to 9.837% in 2018 and retained as single digit inflation at 7.144% in 2019. Evaluating inflation for three years back from 2017 depicts inflation rate of 15.486% in the year 2014 which increased to 17.153 in 2015 and further increased to 17.455% in 2016. Clearly, the indices point out that before COVID-19 struck, the government was on course to building a robust and resilient economy.

The novel COVID-19 coupled with the Russia-Ukraine war has had and continue to have tremendous negative effect on the Ghanaian economy.

The direct impact of COVID-19 is the reduction of government revenue due to the lock down and the closure of the airport, harbours and land borders.

Furthermore, government has to redirect scarce resources to build treatment centres for COVID-19 patients which had strenuous effect on government budget.

Even though the government of Ghana received COVID-19 relief supports from the international community but that did not commiserate with the domestic investment to bring the corona virus infections under control.

The indirect effect of COVID-19 on the Ghanaian economy stems from the spillover effects of policies implemented by our trading partners in attempt to curb the negative impact of the pandemic on their economies.

In the heat of the pandemic most advance economies engaged in a policy called quantitative easing which is simply the unconventional way of printing and pumping money into their economies.

The quantitative easing policy implemented by these advance economies resulted in inflation and we have been importing at such inflated prices from them too.

As a consequence, our economy has been hit by inflation shock which has brought a high cost of living on the ordinary Ghanaian.

The inflation shock has been compounded by the Russian-Ukraine war since both Russia and Ukraine are major players in the global supply chain. Russia is the third largest oil-producing nation in the world, accounting for about 10% of global output. A cut in the Russian oil output resulting from sanctions has caused a rise in oil price which has triggered a rise in goods and services due to interconnectivity of economies around the world.

In addition, as a result of the war, Russia has cut gas supply to most European countries which will increase operating cost of firms.

The increase in production and service cost in Europe will increase the price of goods and services that Ghana imports from Europe, thereby accounting for higher cost of living in Ghana.

Therefore, Ghanaians must not blame government for the rising cost of living since the true cause of the rising inflation is global economic shock.

Instead, Ghanaians must support the government in seeking financial assistance from the International Monetary Fund (IMF) to stabilise the economy.

Despite the spillover effect of the global economic crises on the Ghanaian economy, the government has been rolling out a number of programmes to formalise the economy to enable it stand the test of time and also assist current and future managers of the economy to make data driven decisions.

The government digitisation programme has been a success and still on course to create a database on all Ghanaians.

In the long-run the database would be integrated with other public services such as the police service, immigration service and the death and birth registry.

Such integration will enable government to have accurate number of the Ghanaian population without necessary carrying out house to house census.

The integration of the national database with the police database will assist the police to swiftly deal with crime.

Government is determined in fighting corruption and increasing revenue collection and this is exhibited by digitalising the revenue collection organisations such as the Ghana Revenue Authority.

Additionally, the mobile interoperability policy has been absolutely phenomenal and has contributed immensely in moving the economy into a cashless economy with the over arching aim of fighting inflation.

The government has not only concentrated its effort in digitalising the economy but has also implemented policies to industrialise the Ghanaian economy as well.

Under the government one-district-one-factory about 250 factories have been built so far across the country which is at various stages of completion.

These factories when become fully operational will provide import substitutes and further boost exports too for the country.

The list of projects and programmes implemented by the government could go on and on but I advice you visit government website for more details.

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