Ghana’s economy in recession, says Prof Lord Mensah
Professor of Finance at the University of Ghana Business School (UGBS), Professor Lord Mensah, has said Ghana’s economy is in recession.
His assertion is based primarily on the fact that the country’s yield curve is inverted with the economy suffering from short-term pressures given the high-interest rates or yields on short-term debts like treasury bills.
According to him, the economy has not been calibrated in a manner that makes it easy for one to tell that the economy is in a recession.
He has therefore called on Finance Minister Ken Ofori-Atta to admit the economy is in recession, quantify the recession, and then implement measures aimed at dealing with the recession.
Sharing his views on the 2023 Mid-Year Budget Review, Prof Mensah noted that contrary to statements by the Finance Minister that the economy has “turned the corner” and is set for recovery, the budget did not signal growth but rather a recession.
In his view, the Government did not get its priorities right in the Mid-Year Review Budget, and that Government only “threw around figures to wet the appetite of Ghanaians.”
“We are in a recession, the mid-year budget review was just numbers that the Government threw out there to wet the appetite of Ghanaians. The mid-year budget did not signal growth and the Finance Minister has to admit that we are in a recession and find measures to deal with it,” he stated speaking on the NorvanReports and Economic Governance Platform X Space Townhall Discussion on the topic “Mid-Year Budget Statement: Recession or Growth Signal.”
As noted by the Finance Minister in the presentation of the Mid-Year Budget Review, key revisions to the macro-fiscal targets for the year 2023 encompass alterations to the overall Real GDP Growth rate, Non-Oil Real GDP Growth rate, End-period headline inflation, Primary Balance on Commitment basis, and Gross International Reserves.
The key revisions to the macro-fiscal targets for 2023 year include:
i. Overall Real GDP Growth rate of 1.5 percent down from 2.8 percent;
ii. Non-Oil Real GDP Growth rate of 1.5 percent down from 3.0 percent;
iii. End-period headline inflation of 31.3 percent, from 18.9 percent;
iv. Primary Balance on Commitment basis of a deficit of 0.5 percent of GDP compared to a surplus of 0.7 percent of GDP, aligning with IMF-supported PC-PEG target Primary balance;
v. Gross International Reserves (programme definition) sufficient to cover at least 0.8 months of imports of goods and services by 2023.
An economy is said to be in recession when its GDP growth contracts for two consecutive quarters.
