|
Impact of
global economic crisis: ISSER paints gloomy picture
Accra, March 12, Ghanadot/GNA – The Institute
of Statistical, Social and Economic Research (ISSER) of the
University of Ghana, on Wednesday said the global economic
crisis was fast taking a toll on Ghana’s export earnings and
remittances warning this posed “danger” to the economy and
to households.
Dr Charles Ackah, a Research Fellow at ISSER, noted that
even though the year-on-year records showed that export
earnings and remittances in 2008 were higher than 2007, the
monthly percentage increase reflected significant decreases
due to the global economic crisis.
He was speaking at a day’s workshop on the Global Financial
Crisis and Developing Countries jointly organized by ISSER
and the Overseas Development Institute (ODI).
The workshop, which was to discuss a report from a study on
the social impact of the global financial crisis on
developing countries, was attended by representatives from
academia, policy analysts, think-tanks, the private sector,
labour, the media and the public sector.
Dr Ackah in his presentation noted that most developing
countries had underestimated the impact of the global
economic crisis on their economies, but the evidence was to
the contrary.
“It may be true that not many financial institutions in poor
countries have links with mother companies and are not
largely exposed to investment in financial instruments in
Europe but to the extent that poor countries depend on the
developed countries as export markets, for foreign direct
investments (FDI), loans, remittances and for aid, the poor
countries will be gravely affected in the long-term,” he
said.
He made particular reference to the recent boom in the
Eurobond market from where Ghana and other African countries
got lot of their bonds purchased, saying that could also
impact on the economies of those poor countries involved.
“But the crisis is not only for banks, stock exchanges and
government to deal with – it is fast crippling in on
households in poor countries too,” he said.
Dr Ackah said with an average growth rate of 20 per cent,
export earnings had been the backbone of the economies of
developing countries over the past five years, adding that
remittances had also been a major source of household
income.
He said the two coupled with substantial external financial
influences such as the HIPC fund among others, had sustained
economic growth at about five per cent over the period.
“Export earnings from cocoa in particular have been a major
source of income for women who used a greater portion of
those earnings to pay for the education and health of their
children more than men do and so if export earnings dwindle
they will raise the poverty level from 28 per cent to at
least 29.5 per cent in the short term,” he said.
He said the fall in export earning with its attendant fall
in foreign exchange earnings, coupled with the falling
tourist receipts and FDI would significantly reduce
government revenue, increase national debts and worsen the
budgetary positions of many poor countries.
“Ghana’s economy is not well diversified and so the
dependence on a few pillars like cocoa and gold puts Ghana
in a dangerous situation in the face of the global economic
crisis,” he said.
Dr Ackah said Ghana lacked the fiscal and institutional
capacity to deal adequately with the crisis, and as a result
the World Bank has placed her on the list of highly exposed
economies, which meant that World Bank loans to Ghana would
be highly limited.
“Some local banks with links abroad have also received
instructions from their mother companies to cut down on
lending, particularly mortgage lending, and that is going to
affect credit to small scale industries and eventually
households would suffer.”
He therefore called on the government to use monetary and
fiscal policy to deal with the crisis and avoid its
pro-cyclical effect on the economy and also look more to
domestic sources of funding to boosts economic growth.
“We also need to expand social safety nets in order not to
worsen the poverty situation, form alliances with emerging
markets within the sub-region and have a unified approach to
dealing with the crisis,” he said.
Professor Ernest Aryeetey, Director of ISSER, said it was
high time Africans realized that the global economic crisis
was no more a matter for just academia, stock exchanges,
people in foreign exchange business and banks to discuss but
for all.
Dr. Charles Jebuni, Core Fellow, Centre for Economic Policy
Analysis (CEPA), who presided, said the global economic
crisis had implications for public sector, export, FDI,
financial sector, private sector, development strategy and
for multilateral arrangements.
He said while individual countries were strategizing to cut
themselves off the rest of the world as a way of avoiding
the crisis, the IMF, World Bank and WTO would be expected to
rethink their multilateral policies to ensure that those
were meaningful to developing countries in particular.
GNA
|
