The central bank’s research department, which assesses the impact of external stocks on the Ghanaian economy, indicated this in a report titled ‘The Effect of External Conditions on the Economy of Ghana’.
The Bank of Ghana says the cedi will face more external threats this year
The Bank of Ghana says the cedi is expected to continuously depreciate against foreign currencies due to some global threats.
According to the report, the cedi will continuously depreciate against foreign currencies, especially the US dollar, due to some global events which may occur during the year.
It says the expected slowdown in the US and Chinese economies, alongside policy rate hikes in the U.S., strengthening of the USD and higher crude oil prices will all impact Ghana’s economy negatively, leading to a significant deterioration in the exchange rate.
“The slowdown of the world’s two biggest economies will dampen growth in emerging and developing economies, including Ghana, which will result in capital outflows, whereas policy rate hikes in the US will attract investors, also triggering capital outflows from Ghana to the US and resulting in high demand for the dollar, while a surge in oil prices will, although stabilising growth, further increase inflation which will also culminate in a sharp depreciation of the cedi.”
The result of the research further shows that a simultaneous slowdown in the world’s two largest economies will dampen GDP growth in Ghana, induce a significant deterioration in the exchange rate, and induce a marginal increase in the domestic inflation rate and a sharp rise in interest rates.
“A surge in oil prices would result in a relatively stable GDP growth. Inflation would decline initially but pick up marginally after three quarters, while the exchange rate would depreciate sharply,” the report said.
Meanwhile, President Akuffo-Addo had said that his government will do everything within their power to arrest the recent depreciation of the cedi despite the result.
He said, “I am extremely upset and anxious about it, but I want to assure you that all efforts are being made to arrest the decline and restore the cedi to stability.”
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