Improving Ghana’s Economy after Covid-19

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Getting a country to stand up again after the global Covid-19 pandemic is not a small matter.

  1.  This would have to be done with the following Lower interest rates – reduce the cost of borrowing and increase consumer spending and investment.
  2. Increased real wages – if nominal wages grow above inflation then consumers have more disposable to spend.
  3. Higher global growth – leading to increased export spending.

Ghana as other countries must utilize its natural resources and abundant skilled and unskilled labour to do the following which involves creativity such as

  • Higher global growth – leading to increased export spending.
  • Devaluation, making exports cheaper and imports more expensive, increasing domestic demand.
  • Rising wealth, e.g. rising house prices cause consumers to spend more (they feel more confident and can remortgage their house.

This would lead to growth in supply which in turn would herald the following

  • Development of new technology, e.g. steam power and telegrams helped productivity in the nineteenth century. Internet, AI and computers are helping to increase productivity in the twenty-first century.
  • Introduction of new management techniques, e.g. Better industrial relations helps workers become more productive.
  • Improved skills and qualification.
  • More flexible working practices – working from home, self-employment.
  • Increased net migration – especially encouraging workers with the skills that are in short supply (e.g. builders, fruit pickers)
  • Raise retirement age and therefore increasing the supply of labour.
  • Public sector investment – e.g. improved infrastructure, increased spending on education and

The question would be to what extent is the government willing to increase economic growth taking into consideration the negative impact of Covid-19. Ghana would have to implement this via influencing the rate of economic growth through demand-side and supply-side policies.

Expansionary fiscal policy ·  cutting taxes to increase disposable income and encourage spending. However, lower taxes will increase the budget deficit and will lead to higher borrowing. The expansionary fiscal policy is most appropriate in a recession when there is a fall in consumer spending.

Expansionary Monetary Policy- (now usually set by independent Central Bank) – cutting interest rates can boost domestic demand.

  • Stability. A key function of the government is to provide economic and political stability which enables the usual economic activity to take place. Uncertainty and political tension can discourage investment and economic growth.

The current government would have to develop what is called Government supply-side policies · investment in infrastructure, e.g. new roads, railways lines and broadband internet – increases productive capacity and reduces congestion.

  • Privatisation and deregulation – increase efficiency and productivity.

When the present government led by President Akufo-Addo tow this line through the necessary apparatus the country will be set to bounce back from the shcoks of Covid-19.

However we must take into consideration that 2020 is an election year in the country and many uncertainties abound.

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