Ghana’s Foreign Direct Investment (FDI), tourism, macroeconomic and trade sectors in will take a massive hit from the Covid-19 coronavirus pandemic says international auditing firm KPMG in its latest report assessing the health of the country’s economy.
The April 2020 report titled: “The Economic Impact and Implications of COVID-19: The Ghanaian Perspective,” KPMG said the tourism sector will be hard hit as occupancy rates of hotels are expected to decline from 70% to below 30%.
“Considering the global trends in the cancellation of flights, closure of borders and the need to maintain social distancing including the ban on social gatherings, revenues and cash flow of hotels, restaurants, bars, pubs and nightclubs will experience decline significantly,” the auditing firm revealed.
Closely in the heels of the worst-affected sectors will be the investment environment in the country “In an attempt to curb the spread of the virus, travel restrictions and border shutdowns were imposed. An unintended consequence of the Government’s directive is the inability of foreign investors to enter the country to transact business or even undertake feasibility studies. This trend is expected to worsen as the level of uncertainty increases going forward,” KPMG stated.
The trade sector will follow suit with significant declines due to the heavy blow dealt on international trade by Covid -19.
Government revenues will not look good either as it is expected to significantly decline from a projected primary balance of the country to erode greatly from a projected surplus of GH₵ 2.8 billion to a deficit position of GH₵ 5.6 billion.
The Government of Ghana anticipates that, the total shortfall in petroleum receipts, import duties, tax revenues and the cost of the preparedness plan and the Coronavirus Alleviation Programme will cost the economy about GH₵ 9.5 billion.
However, KPMG thinks it will not be all gloomy for some important sectors such as the agriculture sector which will be forced to be catalysed to produce more due to the drain from exports.
KPMG anticipates that there new wave of agric production will see a boost in domestic production and consumption of some food commodities, such as rice, maize, cassava, yam and chicken and export of commodities for which Ghana has a comparative advantage in to trade within the West African Sub-region.
Reduced prices for petroleum products will also ease doing business and production in the country, says KPMG, as new opportunities would be opened in the production sector as import substitution advantages will enhance local production of goods and services.