Ghana: The World Bank yesterday issued a statement announcing the release of its report titled ‘Price Surge: Unraveling inflation’s toll on poverty and food security’ in Ghana. The Bank observed that a combination of domestic imbalances and external shocks in 2022 led to the country’s macroeconomic challenges, which was reflected in a sharp currency depreciation, rising inflation and tumbling investor confidence. It added that pre-existing fiscal vulnerabilities such as a mounting debt burden, a rigid budget weakened by high energy sector costs and chronically low public revenues were deepened by difficult global economic conditions.
The Bank contends that Ghana faces an extremely challenging outlook and the situation is likely to remain challenging before it rebounds. The Bank expects economic growth to weaken to 1.5% this year before edging higher to 2.8% in 2024. However, the economy is expected to recover to its full potential by 2025.
Pierre Laporte, World Bank Director for Ghana, stated that as a result of efforts to address macroeconomic instability, corrective fiscal and monetary policies are expected to influence total demand and slow down non-extractive GDP growth. Laporte added that high inflation, increased interest rates and macroeconomic uncertainties could keep private consumption and investment growth below pre-pandemic levels, leading to subdued non-extractive growth in the short term.
The report further indicates that elevated inflation in 2022 had significant effects on food security and poverty, with the Bank estimating that nearly 850,000 Ghanaians were pushed into poverty last year as a result of rising prices and a loss in purchasing power.
In the report, the Bank recommends that in addition to managing the immediate macroeconomic crisis, authorities would ‘be well served by embarking on structural reforms to tackle the root cause, boost economic growth and build economic resilience’. It urged that Ghana collect more domestic revenue, implement tighter expenditure controls, address the energy shortfalls, rebuild the financial sector’s capital buffers, boost inflow of FDI by enhancing the investment climate and prioritise investments that maximise climate resilience.
Kenya: Nationwide anti-government protests yesterday resulted in two deaths. Opposition-led protests over high living costs resulted in business and schools being closed, causing significant disruption across the country. Opposition leaders have called for three days of protests, which threaten to cause major economic disruption. Religious leaders joined several major countries in calling for dialogue between the government and the opposition to end the protests.
