Economists still see hefty pandemic blow despite eased restrictions

Some economists have cast doubts on hopes that the latest partial easing of coronavirus-induced restrictions would help limit the economic havoc caused by the virus.

The economists told Business24 that the recent measures announced by the President are not enough to prevent the economy from recording its lowest growth in nearly four decades.

President Nana Akufo-Addo, as part of the first phase of plans to lift the remaining coronavirus restrictions, gave approval for educational institutions to be reopened to final-year students and for social gatherings such as conferences and workshops to resume under stringent health protocols.

He also announced that religious services with a maximum number of 100 congregants at a time can take place from June 5, with a mandatory one-metre rule of social distancing between congregants.

Responding to whether the measures would help limit the economic damage from the pandemic, Dr. Magnus Ebo Duncan, an economist and statistician, told Business24 that the crash of crude oil prices and the closure of the country’s borders have hurt the economy the most—and these are areas which have barely been affected by the latest easing of restrictions.

“Some businesses are still restricted, especially those in the tourism sector. The easing is not enough to make the sector flourish. For instance, hotels are closed and large conferences are still not permitted. As such, if there are any benefits to be accrued from the easing, it is more likely to be social rather than economic,” he said.

He added that a rise in crude oil prices—which tanked in March—would do a lot more to limit the economic damage caused by the virus, but unfortunately, the country has little control over that situation.

Dr. Duncan stated that for the economy to rebound from its current depths, government has to devise a means of investing in the real sector as a way of boosting demand for goods and services, which has declined partly as a result of job losses suffered in the wake of the pandemic.

“With the private sector down, it is imperative for the government to spend,” he said.

Another economist, Courage Martey, who works with investment banking firm Databank, stated that a rebound in crude oil prices could help plug the GHȼ5.7bn hole in the government’s crude oil receipts. However, the easing of restrictions will take a while to yield the right impact, he said.

“I am not sure any damage limitation would come as a result of the easing of the restrictions. Easing of domestic restrictions will not have a significant impact on the economic outlook as long as global supply chains remain disrupted and our borders remain closed.”

He further stated that the psychological damage caused by the virus would make people edgy even when the restrictions are lifted, such that it would take time for people to adjust to the post-COVID-19 era.

The Ghanaian economy is projected this year to experience its lowest economic growth since 1983, with real GDP forecast to increase by just 1.5 percent as a result of the coronavirus shock.