The Institute of Economic Affairs (IEA) has urged the Bank of Ghana (BoG) to leverage the country’s natural resources to stimulate economic growth and attract investments in both physical and human capital.
The IEA argues that tapping into Ghana’s resource wealth could lower business costs and foster a more conducive environment for long-term economic development.
In its bi-monthly Economic Outlook report for September to October, the IEA highlighted key challenges facing the Ghanaian economy, including low levels of public investment and ongoing macroeconomic instability.
The report suggests that these factors are holding Ghana back from reaching its full growth potential.
The IEA also pointed to the International Monetary Fund’s (IMF) recent projection, which forecasts a slowdown in Ghana’s economic growth during the second half of 2024 compared to the first half, reinforcing the need for strategic resource-based investment to stabilize the economy.
“For 2024 as a whole, the IMF has revised its growth projection for Ghana from 3.1% to 4.0%, indicating an expected stronger recovery from the effects of Covid-19 and the general economic crisis that has plagued Ghana in the past four years or so.
“Notwithstanding this higher growth projection for 2024 as a whole, the fact that it is much lower than the growth rates in Q2 and Q3 suggests that growth is expected to slow down in H2-2024 compared with H1-2024. That said, Ghana is generally growing below its potential due to several factors, including low public investments, macroeconomic instability and the high cost of doing business.
“Achieving higher growth will require, in particular, leveraging the country’s huge natural resource wealth to increase investments in physical and human capital, lowering the cost of doing business and sustaining macroeconomic stability.”
The Institute of Economic Affairs also urged the Bank of Ghana and the government to tackle the root causes of Ghana’s persistent inflation.
This call to action is driven by concerns over the country’s economic stability, particularly in light of September’s inflation rate rising to 21.5%, which ended a five-month streak of declining inflation rates.
“We have long maintained that it will require the joint effort of the Bank of Ghana and the Government to address the underlying supply and cost drivers mentioned above to break Ghana’s inflation persistence.”
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