The Organisation for Economic Co-operation and Development (OECD), in its latest Economic Outlook, indicated that global economic developments have begun to improve, helped by lower energy prices, improving business and consumer sentiment, and the reopening of China. However, Ghana and Africa were conspicuously missing on the list. So, where is Ghana?
Yes! To find Ghana, the best location is as at the tail end of the economic spectrum which is reserved for failed countries like Sri Lanka – a country that citizens chased their Prime Minister away and turned the Presidential Villa into a playground. A country without a structured government. That is where Ghana, the once torchbearer for Africa now finds itself.
It Is not surprising that Africa, the continent with a population of 1.3 billion and a combined GDP size of $3 trillion, is largely missing in the OECD’s Economic Outlook. Ghana, one of the continental economic giant, is still in the throes of close to seven-year disastrous administration of bad governance.
The current abysmal economic conditions of the country which is reeling under a heavy debt servicing rate of more than 90%, means only one thing – will not feature in the OECD Outlook. Only South Africa was classed, with a real GDP growth year-on-year of 1.0% in 2024, up from 0.3% this year.
According to OECD Economic Outlook, five major economies of the world (India, China, Indonesia, Türkiye and Saudi Arabia) will report varying dimensions of real GDP growth in 2024. India tops with a 7.0%, up from 6.0% in 2023; China, in second placing, will see economic downside with 5.1% real GDP drop, from 5.4% this year; Indonesia will climb to 5.1%, from 4.7% this year; Turkey (still counting on recent earthquake aftershocks see an uptick of 3.7%, from 2023’s 3.6%.
Saudi Arabia will close the top five real GDP growth of 3.6% next year, from 2.9% this year. The U.S., the world’s biggest economy with $23.32 trillion GDP size, will drop to 1.0% next year, from this year’s 1.6%.
Russia, the aggressor which launched a destructive war against Ukraine last year, will continue to see negative real GDP performance. Its economy will move from -1.5% this year to -0.4% next year. But European counterpart Germany will wriggle out from negative -0.0% to see growth of 1.3% in 2024.
Global GDP Growth Stabilizes
Though global (GDP) growth has stabilised, the improvement is still fragile. Lower energy prices are helping to bring down headline inflation and ease strains on household budgets across the world, but the reverse is true for Africa and Ghana, where the cedi still depreciating at astonishing rates, fuel prices ticking upward day in day out without slowing.
Moreover, core inflation is proving persistent and the impact of higher interest rates is increasingly being felt across the economy. This got Fitch alarmed as it came out last week to warn the country of the rising interest on debts.
The OECD 2023 Economic Outlook also underlined a range of risks, including the possibility that inflation could prove more persistent than projected across countries; and that the impact of higher interest rates on financial markets and economic activity could be stronger than expected.
Taking this projection into the Ghanaian context, one could say that the dire situation the country finds itself could become hopeless in the near future. This literally means that Ghanaians will suffer more as the sun rises and sets.
Recovery to Remain Weak
With recovery set to remain weak by past standards, and the effects of tighter monetary policy increasingly being felt, Ghana’s path to 2024 is a long unwinding road.
Meanwhile, projected global real GDP growth in 2023 will be 2.7% year-on-year, the lowest annual rate since the global financial crisis, with the exception of the 2020 pandemic period. A modest improvement to 2.9% is foreseen for 2024, according to OECD.
Annual OECD GDP growth is projected to be below trend in both 2023 and 2024, although it will gradually pick up through 2024 as inflation moderates and real incomes strengthen, the Outlook predicted. Also, the OECD Group projected headline inflation in 2023 and 2024 are 6.6% and 4.3% respectively.
Can Ghana come out of the wood? That depends on the President and his economic management team who are steering the affairs of the country.
That notwithstanding, the OECD outlook recommended that “well-calibrated policy measures are required to unwind the impact of the recent sequence of negative shocks to the global economy, restore economic stability, and strengthen prospects for strong, inclusive and sustainable improvements in living standards”.
In particular, national governments across the world are advised to maintain restrictive monetary policy to combat inflation. “Monetary policy needs to remain restrictive until there are clear signs that underlying inflationary pressures are durably reduced. This may require additional interest rate increases in economies in which high core inflation is proving persistent”, the OECD outlook said.
Meanwhile, to navigate this headwind, it is imperative that the Nana Addo governments prioritizes pro-growth spending and supply-boosting structural reforms unlike the usual norm of borrowing and spending on consumer goods.
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