Ghana’s economy is impacted by globalization and external shocks – UNDP

Doctor Angela Lusigi

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Ghana’s economy has been affected by globalization and external shocks, said Dr. Angela Lusigi, Resident Representative of the United Nations Development Program (UNDP) in Ghana.

She noted that, for example, the COVID-19 pandemic weighed on the economy, resulting in unforeseen expenditure of GH¢14 billion (or 3.6% of GDP) and a shortfall of GH¢11.9 billion. of GH¢ (or 3% of GDP). of GDP) in 2020.
She added that the ongoing war between Russia and Ukraine has led to higher inflation and a depreciation of the cedi, mainly due to rising oil and food prices as well as supply shortages. in fertilizer.

“These food, energy and financial shocks have negatively impacted Ghana’s economic trajectory and have slowed recovery from the COVID-19 pandemic,” Dr Lusigi said in his presentation at an Association meeting. Ghanaian Former International Civil Servants (GAFICS) in Accra.

“These impediments to Ghana’s development progress are presented as negative signals and factors which are the underlying causes of the much-talked-about symptoms including high unemployment, devaluation of the cedi, rising interest rates interest and inflation, to name a few,” she said. added.

The event, which took place at the Ghana Institute of Management and Public Administration on the theme “The Economic Governance, Peace and Security Nexus”, brought together members of the association.
Also present were Prof. Samuel Kwaku Bonsu, Rector, GIMPA, Dr. Augustina Akonnor, Dean of Students, GIMPA and Prof. Kingsley S. Agomor, Head of Department of Governance and Leadership, School of Public Service and Governance, GIMPA.

Speaking on the theme “Unlocking the nexus between economy, governance and peace in Ghana; A road less traveled,” said Dr. Lusigi, it would be useful to reflect on the links between these drivers to inform strategies that operate within the context of limited fiscal space and within available capacity.

Addressing the multiple obstacles to development progress, Dr. Lusigi said Ghana’s positive economic growth trajectory was slowing down, with the current forecast of 3.7% being well below the average growth of 7% between 2017 and 2019 before COVID. 19.

She said growth and a strong economic outlook based on commodity exports have helped position Ghana as a lower-middle-income country with access to private capital.

“However, limited economic diversification and low productivity, over the years, have hampered the creation of decent jobs to absorb the growing skilled and unskilled population,” she said.

She said Ghana’s service sector had become a key driver of economic growth but had not produced the expected number of jobs.

She noted that this puts Ghana at risk of getting stuck in what is known as the “middle income trap”, where middle income countries have not been able to transition to a high income economy. .

According to the Bank of Ghana, the country’s outstanding debt in terms of GDP was 78.3% at end-June 2022, down from 76.6% in December 2021.

Dr Lusigi said this, coupled with weak domestic revenue mobilization, has placed Ghana in a tight fiscal position with the deficit reaching 12.1% of GDP by the end of 2021.

She said these fiscal imbalances had led to the downgrading of Ghana’s credit rating, which was recently revised by S&P Global Ratings from B-/B to CCC+/C, putting the country’s creditworthiness at a disadvantage.
She said that with no less than 48% of total public debt held by outside investors, Ghana’s external liquidity situation was extremely vulnerable to the confidence and behavior of outside private investors.

“Low investor confidence in Ghana’s sovereign bonds and in the economy as a whole is leading to capital outflows, loss of access to external markets and increased domestic borrowing costs, according to the IMF’s report on Ghana’s Economic Outlook in July”.

Mr. Kwaku Osei Bonsu, Chairman of GAFICS, said that the Association constitutes a group of Ghanaians who have served with the United Nations (UN) and its specialized agencies, the World Bank, the International Monetary Fund (IMF), the Bank African Development Bank, as well as other reputable international organizations.

He noted that one of the main goals of GAFICS is to give back to society.

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Shirlene J. Manley