Covid-19 will collapse Ghana’s GDP to 2.5% in 2020 – BoG fears

the projected fall is expected to be the "worst case scenario" for Ghana's GDP

Covid-19 will collapse Ghana’s GDP to 2.5% in 2020 – BoG fears
Ken Ofori-Atta, Finance Minister

The Bank of Ghana (BoG) has expressed fears that the scourge from the Coronavirus disease (COVID-19) will collapse growth in the economy to 2.5 per cent in 2020.

In a statement from BoG on Wednesday [March 18, 2020], signed by its Governor, Dr Ernest Addison, the central Bank noted that the 2.5 per cent growth rate would be a "worst case scenario" impact from the challenges of the disease on the local economy.

The Governor, however, said a preliminary baseline assessment of the impact of the disease showed that the economy could grow at five per cent this year as a result of the COVID-19.

Giving reasons for the projected falls in GDP, the BoG noted that;

“First, the dampened Global demand could significantly impact Ghana’s crude oil export earnings with major implications for foreign inflows and tax revenues”.

 

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Also “there is likelihood of export restrictions from advanced economies and other emerging market economies which could create supply chain shortages for Ghanaian businesses, with significant impact on imports of intermediate and capital goods, as well as consumption goods.” It added.

The BoG further explained that “this is also expected to negatively affect inputs in the domestic production channels with severe consequences for growth and tax revenues which could become more pronounced by the second or third Quarter.

“In addition, crude oil prices have declined sharply to historically low levels, and already shocks on exports, albeit with some offsetting effects from rising gold and cocoa prices” it noted.

In the 2020 budget, the economy was projected to grow at 6.8 per cent.
Dr Addison said the COVID scourge would result in shortfalls in imports, exports, taxes and foreign exchange, "which will culminate in slowdown in economic activity."