Mr. Johnson Addai Asante, an Economics Lecturer at Kumasi Technical University, has projected that Ghana’s economic recovery is a prolonged process, spanning two to three decades.
“Reverting the country’s economic state back to that of 2018 or 2019 would necessitate a time frame of 20 to 30 years,” he said in an interview on Opemsuo Radio’s Nkwantannanso with George Adjei on August 15.
As per his assessment, the current stability of Ghana’s economy is largely due to the suspension of the nation’s debt servicing by the International Monetary Fund (IMF).
“The suspension of debt servicing means that the accumulation of foreign reserves for debt payment has been temporarily halted. Since the government doesn’t need to use foreign reserves for debt repayment, the exchange rate has stabilized. Nonetheless, the exchange rate remains relatively high. With an increase in the exchange rate, inflation is likely to surge, resulting in elevated prices,” Mr. Asante elucidated.
He further explained that the restoration of economic conditions might not promptly lead to a reduction in the costs of goods and services due to the phenomenon known as “sticky pricing” in economics.
“In economic terms, we refer to ‘sticky pricing,’ where prices of goods remain constant even during an economic upturn. This implies that it will require a substantial duration for prices to witness a decline.”
Mr. Asante issued a warning that straying from the IMF’s recommendations could exacerbate the situation further.
Story by Adwoa S. Danso