The Institute of Fiscal Studies has bemoaned the increasing instability of Ghana’s macro economy.
According to the Institute, the macroeconomic indicators of the economy have deteriorated drastically in the first seven months of the year causing prices of commodities to shoot up abnormally.
Senior Research fellow at the Institute of Fiscal Studies, Dr. Saeed Boakye, while presenting IFS’ assessment of the government of Ghana’s fiscal consolidation efforts in the face of the rapidly deteriorating macroeconomic environment said, “over the period, the macroeconomy has become highly unstable, with all key indicators worsening at rapid rates.”
“Consequently, the relative price stability the country enjoyed in the past few years has disappeared, as the year-on-year consumer price inflation rate, which averaged, for example, 9.9% and 10.0% in 2020 and 2021 respectively, stood at 13.9% in January 2022,” he explained.
According to Dr. Boakye, this increased to 19.4% in March, and further to as high as 31.7% in July 2022, the highest rate of inflation recorded in Ghana since November 2003 (i.e., a period of more than 18 years).
The Institute however detailed how the country’s external payment positions have worsened considerably, causing rapid exchange rate depreciation and inflation rates.
Dr. Boakye stated that despite the country’s record of a trade surplus of US$1,44 billion (2% of GDP) in the first half of the year, both the capital and financial account and current account positions worsened plunging the overall balance of payments into a “large deficit”.
This has caused the “pace of economic activity has begun to slow down”, he said.
SSD/FNOQ
