Economist and political risk specialist Dr Theo Acheampong says Ghana’s economy is now deeply integrated into the global system, making it more exposed to geopolitical shocks and global economic disruptions.
Speaking on Joy News’ PM Express Business Edition on Thursday, the Technical Advisor at the Ministry of Finance said global crises are becoming more frequent, and their impact on economies like Ghana is increasingly unavoidable.
“Gone are the times when every maybe 10 or so years, you would have a major geopolitical event. But what the last few years have taught us is that you should expect these things much more often than not.”
He pointed to recent global developments, including the Russia–Ukraine conflict, as an example of how geopolitical tensions now send shockwaves across the world economy.
“In fact, we’re still in Russia, Ukraine, and then the initial period, the shock that was sent to the whole world with the inflationary spike, and then the cost of living pressures, and then related governments having to make, you know, certain adjustments.”
Dr Acheampong said Ghana’s increasing integration into the global economy means such shocks inevitably filter through the domestic economy.
“But if you look at the situation that we’re in now, where you expect these geopolitical events to be much more pronounced, and number two, the fact that the Ghanaian economy now is heavily integrated as part of the global ecosystem, for sure, you would see some of these pass-through effects come.”
He stressed that while external shocks are largely beyond Ghana’s control, domestic policy choices remain critical in determining how the country absorbs those shocks.
“What then is interesting and important is, if you assume that geopolitical uncertainty is the order of the day, what do you do as a country to respond to that?”
“So that’s what happens externally, you don’t really have much control over it. What you have control over is what you do internally.”
According to him, sound fiscal management and overall economic governance remain central to strengthening the country’s resilience.
“So what you do internally becomes two or three things: what you do in terms of your fiscal performance, how you overmanage the overall economy.”
Dr Acheampong recalled that Ghana’s vulnerability to global shocks became clear during the early phase of the Russia–Ukraine conflict.
“So remember that when we entered the 17th IMF program, there was a statement that the fund issued in the May 2023 report that Ghana had underlying fiscal vulnerabilities.”
“That is why, when Russia-Ukraine happened, we felt the impact much more than we should have, and at one point, you even had the import covers around two weeks or so of reserves.”
He said the situation today is significantly different from that between 2022 and 2023.
“The situation is completely different now than it was in 2022/23.”
“What I mean by that is that there has been more stability within the Ghanaian economy.”
He explained that Ghana’s improved external position is reflected in stronger trade balances and increased reserves.
“And the biggest indicator of your ability to withstand some of these shocks, really comes down to looking at your trade balances.”
He noted that recent economic data from the Ministry of Finance and the Bank of Ghana show significant improvement compared to previous years.
“If you look at those numbers, and you actually compare where we were a few years ago to where we are now, your import cover is around 5.7 months, and that is still growing.”
Ghana’s trade position has also improved, supported by stronger earnings from gold and non-traditional exports.
“So the net trade balance is around a positive 1 billion every month.”
“And then, if you look at the current account, is around $750 million or so.”
Dr Acheampong said these developments indicate that Ghana is better prepared to withstand external shocks than it was a few years ago.
“All of this translates into a much better, improved external position for Ghana, and our ability to actually able to withstand the shocks relative to where you were a few years.”
Responding to a question on whether the country has now built buffers to absorb global shocks, he acknowledged that progress has been made, but more work remains.
“We have some savings to be able to help address these shocks if the pass-throughs come, of course, you have to do more.”
“But what I’m saying is that your first line of impact with these global event and these shocks would come you feel it immediately from the external side, and your trade balances, your current account, and we are in a much better position now from what we have in terms of reserves to be able to augment or support or withstand the shocks.”
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Source: www.myjoyonline.com
