An Economist and Senior Lecturer at the University of Ghana, Professor Godfred Bokpin believes the destructions caused by the COVID-19 pandemic may leave long-lasting effects on economies that will go beyond 100 years.
He explained that the world has witnessed 15 pandemic events in history and all these pandemics have left behind long-lasting effects on economies.
He stated this whilst speaking at the Ghana Economic Forum at the Kempinski Gold Coast Hotel in Accra on Monday, November 9, 2020.
According to Prof. Bokpin, there is evidence that points to the fact that some of the gains that have been made in terms of achieving the Sustainable Development Goals (SDGs) have practically been reversed.
“…the world is practically on half-time. So every country is strategizing going into the second half. So the question we need to ask ourselves is what kind of economy do we want to have post-COVID? Is it going to be the same economy we celebrated? The jobless-growth? Certainly not. Because the trickling down effect we have felt over the years has failed.
“We should be looking at inclusive growth. Because the reality is that if you look at the projections, how many people have fallen into extreme poverty as a result of COVID-19, it’s very huge. The reality is that the long-term effect of COVID-19 may go beyond a century. Because the world has witnessed 15 pandemic events and all of them left behind long-lasting effects”.
Prof. Bokpin however expressed optimism about economic recovery from the current pandemic, against the backdrop that Ghana puts the necessary measures in place to shorten the long-lasting effects of the pandemic on the economy.
“…But we are in a better position to shorten that, based on the measures we put in place today. And those measures must be inclusive and those measures must be people-centered. That is very important. I look at it from Ghana’s fiscal space, that it looks as if we have peaked prematurely. Because now we have very limited fiscal space to be able to engineer the kind of growth that we are talking about.
“In that sense the way to go, you can’t ask for more revenue because the private sector is heavily affected. What we need to do is to pursue greater efficiency. How do we achieve more with less? That is very important. That advice does not only go to the government but it goes to the private sector as well as where I draw my salary from, University of Ghana”.
Speaking on the effects that the pandemic has had on the economy, Prof. Bokpin stated that it is practically important to underscore that Ghana moved from the energy crises from 2012 to 2015, and whilst we were getting out of the financial crises then we are experiencing COVID-19 also. He also indicated that Ghana entered the pandemic with a bit of a weak immune system, having moved from one crisis to the other.
“But we also need to recognize that COVID-19 is a pandemic of inequality. So whilst some people will recognize some gains, the majority of the people are counting the losses”.
He further stated that there is the need to also understand that the real effect of the COVID-19 could not be attributable to the virus itself, but rather more in terms of the containment measures; the lockdown that practically interfered with the mode of doing business and all other aspects of life across the world.
Prof. Bokpin also believed that from the health perspective, the containment measures were very useful but the spillover effect is very great in terms of income losses, productivity losses, and many more.
“So what does that mean for all of us?”, Prof. Bopkin quizzed.
What that means according to him is the emergence of new expenditure patterns that have become necessary because businesses needed to invest to keep up with the new changes especially in the areas of digitization. He, however, noted that there were also some cost-saving that also came in and that also calls for the need to look at the balance at the end of the day.
A representative from the Bank of Ghana also stated that the pandemic has affected inflation which shot up on account of economic agents rushing to the market to buy goods and services. He pointed out that before the lockdown when it was clear that the country was going to be shut down, there was a mad rush for goods and services. That high demand pushed up prices.
“And of course, the market agents also took advantage of the situation to hike up prices. So what we saw from the BOG side was a jump up in inflation from the low single-digit of around 7.8 % and up to around 11.4% and I think that was the peak. We need to see to it that the inertia that increased inflation was not carried on in the economy”.
He pointed out that “from the macro point of view, the initial starting point at the onset of the pandemic was strong and the banks were also in a better position to be able to confront the challenges that come against them.
“Of course, we are also bankers to the central government and there was a hole that was created as a result of crude oil prices which have declined in the world market. Let us not forget that Ghana is a net exporter of crude oil. Therefore, that decline in crude oil prices from the highs of $60 to a low of the lows of $20 meant that a huge hole had been created in the government finances which need to be filled”.
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