Ghana's real GDP contracts by 3.2% in Q2, the first in 37 years

Ghana recently faced a significant economic setback with a 3.2% contraction in its real GDP for the second quarter, marking the first contraction in 37 years. This development has sparked concerns and discussions about the country's economic resilience and future strategies. John Gatsi, the Dean of the School of Business at the University of Cape Coast, shared his insights on the matter in a recent interview with CNBC Africa. Gatsi highlighted the surprise factor of the recent GDP numbers, especially considering the downward revisions made by the IMF and the mid-year budget adjustments. The reduction in GDP projections has significant implications for various sectors of the economy that are directly impacted by such developments. When discussing ways to build a more resilient economy to withstand future shocks, Gatsi emphasized the need for inclusive economic management and growth strategies. He stressed the importance of addressing all sectors of the economy and ensuring a comprehensive approach to managing challenges like the ongoing COVID-19 pandemic. One key area of focus for Ghana's recovery is the collaboration between fiscal and monetary authorities. Gatsi pointed out the need for better coordination and effective strategies to address issues such as borrowing rates, revenue mobilization, and debt management. He emphasized the importance of creating clear monetary policies to support economic growth. The conversation also touched on the pressing issue of debt sustainability and revenue generation. Gatsi raised concerns about the high debt service costs and the limited space for innovation and infrastructure development. He highlighted the challenges of balancing debt servicing with investments in critical areas that drive economic growth. Despite the economic challenges, there are bright spots to look at, such as the agriculture sector showing promising figures. Gatsi discussed the potential of trade, particularly with the upcoming launch of the African Continental Free Trade Area (AfCFTA) where Ghana will play a significant role. He emphasized the need for improved infrastructure and processing capabilities to leverage trading opportunities across the continent. In conclusion, Gatsi expressed optimism about Ghana's ability to navigate through the current economic challenges with the right policies and strategies in place. Working towards enhancing revenue mobilization, managing debt effectively, and positioning the country for increased trade opportunities will be crucial for Ghana's economic recovery and resilience.