The World Bank’s report attributes macroeconomic challenges in Ghana during 2022 to a combination of domestic imbalances and external shocks. Currency depreciation, rising inflation, and decreased investor confidence were evident during the year.
The country’s existing fiscal vulnerabilities, including a mounting debt burden, inflexible budget due to high energy sector costs, and consistently low public revenues, were exacerbated by challenging global economic conditions, as highlighted in the World Bank’s latest Economic Update titled “Price Surge: Unraveling Inflation’s Toll on Poverty and Food Security.”
The report predicts a tough economic outlook for Ghana, with projected economic growth slowing down to 1.5% in 2023 and remaining depressed at 2.8% in 2024. However, the economy is expected to recover to its potential growth by 2025.
The World Bank advises the authorities to implement corrective fiscal and monetary policies to address macroeconomic instability. It also recommends structural reforms to address root causes, boost economic growth, and enhance economic resilience. Some of the key recommendations include sustainable revenue collection, tighter expenditure controls, resolving energy sector issues, strengthening the financial sector, attracting foreign direct investment (FDI), and prioritizing climate change adaptability.
The report emphasizes that high inflation in 2022 had significant effects on food security and poverty in Ghana, impacting the purchasing power of households and leading to worsening living standards. As a result, nearly 850,000 Ghanaians were pushed into poverty in 2022.
To mitigate the impact of inflation on food security, the report suggests policies to enable farmers to adjust to global demand, improve productivity, reduce production costs, and enhance the quality and safety of food. Climate smart agriculture initiatives and sustainable practices are essential to help farmers adapt to changing weather patterns and withstand future shocks.
In addition, the government should focus on supporting higher domestic food production and opening the country to more effective integration with global food supply chains. Policies promoting regional and global trade, reducing market distortions, and enhancing market efficiency can improve the availability and affordability of food.
By implementing these recommendations, Ghana can address its macroeconomic challenges, alleviate poverty, enhance food security, and foster economic growth and stability.