Popular Ghanaian economists, Professor John Gatsi has warned that the ravaging coronavirus Covid-19 is set to deal a the devastating effect on the Ghanaian economy as it forces China’s economy to a halt and is already threatening industries in Europe and America.
In a statement made available to Whatsup News, Professor Gatsi outlined the Ghanaian cedi and Imports and crude oil revenues as major elements of the economy that the virus will hit badly, even as Ghana is yet to record an official case.
“Budget implementation is about to suffer as the average crude oil price of $58 per barrel projected in the 2020 budget has since dropped to around $44. Meaning the first quarter is likely to suffer about 24% reduction and if the volume of production remains the same then revenue loss maybe around same level,” Prof. Gasti explained.
“If the loss of about $10 of crude oil price persists or remains at the current price level for an extended period it will have deep negative volumetric effects on petroleum revenue and there may be the need for adjustments in macroeconomic expectations. This has implications for the amount of money to be available for transfer to the ABFA and possible depletion of the stabilization fund,” he said.
According to the economic analyst, the downturn of revenues from the Annual Budget Funding Amount (ABFA) will affect the current government’s ability to fund certain projects that have been earmarked “…are expected to suffer if the global coronavirus spread is not contained and mitigated quickly,” the economist warned.
Already, the Akufo Addo administration has admitted that the devastating effect of the coronavirus in Chin, it likely to affect that country’s ability to meets its end of a US$ 2 billion bauxite-for-loan deal between the Government of Ghana and China’s Sinohydro Company.
The Road and Highways Minister, Kwasi Amoako Attah admitted that the effects of the coronavirus was “Understandable”.
He was recently talking to journalists in Koforidua-Eastern Region in a comment referencing the absence of officials of the Sinohydro group at a scheduled event in Ghana, “The officials should have come from China to join us to perform these exercises in relation to the Sinohydro [deal but] because of the manifestation of that deadly disease [coronavirus], that certainly has affected a lot of things”.
Meanwhile, the Ghana Union of Traders Association (GITA) has warned of price hikes as members are not able to import mostly from China.
“The immediate positive effects on the cedi will be eroded by lower exports and fiscal losses because of extra precautionary measures in many economies,” Professor Gatsi warned.
Analysts have reported that China-the world’s biggest manufacturing hub has been forced to grind to a screeching halt due to the devastating effect of the virus, “It’s like Europe in medieval times,” said Jörg Wuttke, the president of the European Chamber of Commerce in China.
Already, world stock exchanges are recording massive bear markets and the US economy has been hinted at taking a major hit. Already, global markets such as the Down Jones (plunged over 2,000 points today), the S&P (6% drop), Nasdaq Composite Index (5.4% down), Japan’s Nikkei (5.1%). Today’s dip on the markets is a reflection of consistent drops in trading over the past few weeks-After Covid-19 begun to hit harder.
So far many G7 countries have recorded coronavirus infections, including Italy which has shut down the movement of over 6 million people following a major outbreak in that country.
Over 20 countries have recorded outbreaks with total global infections at almost 150,000 at the last count and about 4,000 deaths recorded so far.