Accra, May 10, 2018//-A renowned Ghanaian Economist and Professor of the University of Cape Coast (UCC), Prof John Gatsi has asked managers of the economy to bring all hands on deck to find ways of translating the country’s improved macroeconomic outcomes into concrete results for the benefits of the citizens.
According to him, “Let’s work harder to find ways of translating improved macroeconomic outcomes into concrete results expected by citizens, because historical data shows that we do not sustain improved performance in Ghana”.
Prof Gatsi explained to African Eye Report that economic management involves identifying problems or needs of an economy and making the required investments to resolve the problems over time.
“It is without doubt that stable and improving macroeconomic indicators are expected policy outcomes in this process of economic management. However, these outcomes are partly and significantly the effects of past investments made in problem sectors of the economy”.
It could be said that some political decision makers, in Ghana, think more of the short term and hold on to these short term outcomes in approaching issues of the economy, Prof Gatsi noted.
Undoubtedly, it can also be said that the effects of investments from the past, especially in the energy sector and the IMF program provided the guarantee for improving macroeconomic outcomes being witnessed currently in Ghana.
But as usual of some politicians, they will focus on whom credit should be given, while ignoring the critical questions of how citizens are benefiting from these economic management outcomes, he added.
Good management
“Good management requires that economic agents (businesses, households and governments) look at macroeconomic indicators as inputs that should generate improved expected final outcomes in all areas of economic activity and livelihoods”.
To this end, Prof Gatsi said inflation should definitely reflect in prices such as exchange rates, interest rates and prices of goods and services( for instance transportation, service charges, among others).
Some economists relate inflation to the level of unemployment, exchange rate, interest rates and economic growth.
Thus, lower inflation should be good news when this input translates into lower prices. However, many questions arise in this process.
Difficult to see in practice
One could ask, why is the inverse relationship between inflation and the level of employment, in theory, difficult to see in practical, he questioned.
Why is economic growth (measured with GDP) not reflecting in the employment generation? Why is lower inflation producing reduced policy rate but difficult to impact well on lending rates by banks?
“The answers to the above questions can be found in whether we consider the indicators as inputs or outputs in the economic process. So, I will say that we do not consider these outcomes as inputs which must directly lead to better lives”.
With this, politicians will not have it as flagship to always be talking about improved macroeconomic environment, while escaping the important questions of how the indicators are leading to lower prices, improved access to funds, creation of sustainable jobs, among others.
Furthermore, Prof Gatsi observed that Ghana is now among countries with huge debt stocks and associated with repayment burden.
Adding: “The benefits of an economy is a practical experience in our daily livelihoods, which is why market women, wives and mothers, businesses and workers are the ones who validate economic figures.
Lower inflation and economic growth which come with serious erosion of purchasing power for workers should be reversed, according to him.
Ghana which is a second largest exporter cocoa in the world and also the exporter of several natural resources including oil and gold recorded a GDP of 8.5% in 2017 and it is expected to grow further this year.
The country’s oil and gas sector contributed hugely to the 2017 growth. But the country’s economic growth has not been translated into jobs for the teeming unemployed youth.
Similarly, Ghana’s inflation rate rose at the slowest pace in more than four years in April 2018, according to latest figures from the Ghana Statistics Service (GSS).
Inflation rate for the month of April decelerated to 9.6% from a year earlier which is the slowest pace since January 2013.
However, the general level of prices of goods and services in the West African country are higher than the figures released by the GSS.
By Masahudu Ankiilu Kunateh, African Eye Report
