In a recent discussion on the PM Express Business Edition, economist and political risk expert Dr. Theo Acheampong highlighted the increasing integration of Ghana’s economy into the global landscape, making it more susceptible to international geopolitical shocks and economic disruptions.
Dr. Acheampong, who serves as a Technical Advisor at the Ministry of Finance, noted that global crises have become increasingly frequent, posing unavoidable risks for economies like Ghana’s. “We are no longer seeing significant geopolitical events every decade,” he stated. “Recent years have taught us to anticipate these occurrences with greater regularity.”
He cited the ongoing Russia-Ukraine conflict as a stark example of how geopolitical tensions reverberate throughout the global economy. The inflationary pressures and rising costs of living resulting from such events have forced governments, including Ghana’s, to make challenging adjustments.
Dr. Acheampong emphasized that Ghana’s growing global economic integration means that the reverberations of these external shocks inevitably impact the domestic economy. “Given the pronounced nature of geopolitical events today and Ghana’s significant incorporation into the global economic ecosystem, we can expect to see those effects filtering through,” he explained.
While acknowledging that external shocks are largely out of Ghana’s control, he underscored the importance of domestic policy decisions in shaping how the economy responds. “The key question is: how should Ghana respond to this era of heightened geopolitical uncertainty?” he asked. “What you can control is your internal strategic choices.”
Central to building the country’s resilience, Dr. Acheampong pointed out, is sound fiscal management and strong economic governance. “It’s essential to focus on your fiscal performance and manage the economy effectively,” he advised.
Reflecting on Ghana’s vulnerabilities, he recalled the early days of the Russia-Ukraine conflict, during which it became apparent that the nation’s fiscal weaknesses had left it particularly exposed. “When we entered the 17th IMF program, the reports indicated that Ghana faced underlying fiscal vulnerabilities,” he noted. Consequently, when the Russia-Ukraine crisis hit, Ghana felt the repercussions more acutely than expected, with reserves dwindling to only about two weeks’ worth of imports.
In contrast to 2022-2023, Dr. Acheampong underscored that the current situation is markedly improved. “There has been more stability within the Ghanaian economy,” he noted, highlighting how stronger trade balances and increased reserves point to a healthier external position. Recent data from the Ministry of Finance and the Bank of Ghana indicate a positive trend, with Ghana currently enjoying an adequate import cover of approximately 5.7 months.
According to Dr. Acheampong, stronger earnings from gold and non-traditional exports have positively impacted Ghana’s trade position, yielding an impressive net trade balance of about $1 billion monthly, alongside a current account positioning around $750 million.
These developments indicate that Ghana is now better equipped to withstand external shocks than in previous years. “Our improved external position enhances our ability to manage global disruptions compared to where we stood a few years ago,” he said.
While progress has certainly been made, Dr. Acheampong acknowledged that there is still work to be done. He pointed out that Ghana has made strides in building financial buffers to address potential shocks, but emphasized the need for ongoing efforts. “We have some reserves that can help mitigate these external impacts, but we must continue to enhance our internal response mechanisms,” he added.
As Ghana navigates its place within the global economy, the resilience it demonstrates will be crucial in absorbing the effects of future geopolitical unpredictability.
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