Question

Discuss the role of macroeconomics in addressing the effects of covid-19 on the econnomy of Ghana

Answer 1

Answer :-

Today, the whole world is affected by corona virus, not only millions of people have lost their lives due to this virus, but also the economy of the countries are going through their most difficult phase.if we talk about the ghana , ghana is the third most affected country after South Africa and Nigeria in sub saharan region with approx 9500 corona positive cases and 44 deaths.This Pandemic has brought uncertainity to Ghana's fast growth rate since years.As a result of this pandemic, this area may have to face contraction after 25 years.

Macroeconomic effects of corona :-

GDP :- Due to Corona virus, the whole world is in Lokdown today, due to which economic activities are stopped there, which is affecting country's gdp. ghana has also had to resort to Lokdawn to protect her citizens from the outbreak of Corona.Due to this, IMF has reduced Ghana's growth projection in 2020 from 5.8% to 1.5% in its latest world economic outlook , this is lowest since 1983.

Trade :- Ghana's economy is primarily export oriented, with exports sector accounting for 38% of Ghana's GDP in 2018. But the most immediate impact of this pandemic is on the trade. Economic activity has stopped due to Corona and people are imprisoned in homes, which has reduced both demand and prices of global commodity. Thus from oil to kocoa, all exports have reduced.

Investment :- Foreign direct investment will also fall over in the country. According to the UNCTAD's latest assessment FDI across the world FDI will decline to 30 - 40% , this situation is similar to the 2008 global financial crisis.Also Domestic investment is expected to decline with projection of 12% in 2020 which was 16% in 2019.

Fiscal Deficit :-
Due to the combined effect of all this, the economy of Ghana may have to face severe slowdown. With the shutdown of the industry, reduced tax collection, decline in exports, the government's revenue will also decrease. On the other hand, to reduce the damage caused by Corona, to remove unemployment and to revive the economic wheel, government spending will increase, which can also increase the country's fiscal deficit.