Focus on Food Inflation, Make Strategic Use of Goodwill, and Avoid Being Misinformed About Economic Recovery – Prof. John Gatsi
After elections, politicians often continue their campaign narratives. One such narrative is the claim that the economy has recovered to pre-COVID levels. This has been central to the 2024 campaign, and the President reiterated it at the first meeting of the transition team, aiming to create the impression of a sound economy being handed over to the new administration.
However, this is at odds with warnings from government statisticians, who caution that unless growth numbers are sustained, their impact on citizens – who are the real owners of the economy – will remain negligible.
While growth numbers have been positive from the first to the third quarters of 2024, this growth is neither inclusive nor accompanied by job creation. Economic expansion led by the mining sector, including galamsey (illegal mining), is unsustainable and could soon have undesirable consequences.
The oil and gas sector is recording negative outcomes, the cocoa sector has seen five consecutive quarters of negative growth, and water and sewerage also show negative growth, with the electricity sector growing by less than 1%.
The new administration must understand how the economy posted positive growth during the election year, despite marginal or negative performance in key sub-sectors. Recent weeks have seen some currency appreciation, but this came at a steep cost of nearly $900 million, with the potential for a painful reversal in economic fortunes.
Inflation, particularly food inflation, should be an immediate focus for the new government. It reflects widespread cost-of-living challenges, with many citizens experiencing pronounced water and electricity poverty. Food inflation also highlights deeper issues in agricultural production and the urgent need to reverse dependence on food imports.
The economy’s ability to meet debt obligations – both domestic and external – remains unconvincing, with hidden debts and contractual obligations yet to be accounted for.
Instead of assuming the economy has recovered, we must acknowledge that unemployment has surged, and countless Ghanaians with viable business ideas lack the support needed to realize their potential. Meanwhile, interest rates remain prohibitively high for both businesses and households.
The new government must address the problems created by the outgoing administration. These issues should be flagged for immediate action while leveraging goodwill to attract support for tackling food inflation, rebuilding domestic capital markets, restoring confidence, and demonstrating fiscal prudence.
The situation is complex but not insurmountable with determined and strategic efforts.
