Coronavirus outbreak poses significant challenges to Ghana’s economy – Prof Gatsi

March 12, 2020

1 minute read

The Coronavirus outbreak will pose serious challenges to the Ghanaian economy if the disease is not contained and mitigated soon, Professor John Gatsi, Dean, University of Cape Coast Business School, has said.

“The effects on Ghana are many, in the past week GUTA warned of price hikes as members are not able to import. The immediate positive effects on the cedi will be eroded by lower exports and fiscal losses because of extra precautionary measures in many economies,'” he said in an interview.

He said “budget implementation is about to suffer as the average crude oil price of $58 per barrel projected in the 2020 budget has since dropped to around $44, meaning the first quarter is likely to suffer about 24 per cent reduction and if volume of production remains the same then revenue loss may be around same level”.

Prof Gatsi said if the loss of about $10 of crude oil price persists for an extended period it would have deep negative volumetric effects on petroleum revenue and there might be the need for adjustments in macroeconomic expectations.

This he said had implications for the amount of money to be available for transfer to the ABFA and possible depletion of the stabilisation fund.

“Projects anchored on the ABFA, are expected to suffer if the global Coronavirus spread is not contained and mitigated. It is possible the Coronavirus will affect disbursement of the $2bn Sinohydro bauxite backed loan. This means the year of roads is entangled by the coronavirus,” he said.

The announcement about the coronavirus infection and spread mainly in China about two months ago, was considered by many as domestic China affair until the World Health Organisation (WHO) announced global epidemic dimension of the spread.

So far many G7 countries and some African countries recorded coronavirus infections with effect on global economic prospects, trade and investment.

Already, schools in China and Italy have been closed down with the consideration of online delivery in tertiary educational institutions.

Airline business and world financial hubs are at crossroads. There is near transport business collapse in the epicenter of the virus in some countries such as China and Italy.