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In: Economics

Discuss the implication of the widespread disruptions to global, regional supply for Ghana's Balance of payment

Discuss the implication of the widespread disruptions to global, regional supply for Ghana's Balance of payment

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Expert Solution

Covid-19 pandemic has plunged the global economy into an unprecedented recession.

Closure of market places, factories, modes of tranportation, industries and other businesses has led to millions of job losses and steep fall in aggregate demand and supply across the the countries. This has caused massive supply chain disruption, global as well as regional.

Main trading partners of Ghana are India, South Africa, China and Switzerland. Ghana exported Gold worth $10 billion in 2018, mainly to India. Other major goods exported were crude petroleum, and Cocoa beans.

Due to massive supply chain disruption trade is expected to be hit severely, thereby leading to a significant fall in exports revenue for the country. Imports that were around $15 billion in 2018 is also expected to fall down leading leading to shortage of raw materials for important industries.

Balance of payments shows all the transactions between a country and the rest of the world. It includes both, current and capital account balance. On one hand there is expected to be a fall in current account balance as trade remians negatively affected, capital account may see a greater outflow to safe havens such US and other developed countries. Overall it is expected to worsen as net capital flow out of the country remains significantly higher than inflows.


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