A senior lecturer at the University of Ghana says the economy is likely to be boosted by positive public expectation in the incoming government.

Dr Eric Osei-Assibey says key macroeconomic indicators like inflation are likely to see a slump due to the bulging confidence in a Nana Akufo-Addo-led administration.

His comments, made on current affairs programme, PM Express Tuesday, come on the back of reports of reduction in prices of goods following the election of Nana Akufo-Addo as president on December 7, 2016.

Akufo-Addo’s term starts on January 7, however, automobile spare parts dealers in Accra have reduced prices of goods by 30%, citing a promise by the incoming government to reduce import duties as motivation for the move.

A similar situation has been reported at other markets in Accra and the Ashanti Region capital, Kumasi.

 “When people have a positive expectation about the future of the economy, it works in such a way that things will begin to fall into place.

“In economics, expectations play a critical role in determining key macroeconomic indicators. People’s expectation about inflation could really bring prices down because if you expect prices to reduce, your action will be to wait for prices to reduce before you go in to buy and by that action alone, it brings prices further down. So the expectation is good,” Dr Osei-Assibey told PM Express host, Nana Ansah Kwao IV.

He said public confidence in the incoming administration can also have positive implications on the local currency, explaining if people expect the currency to appreciate because a new government is coming to power, that alone can influence their behaviour with regards to their speculative activities.

He explains that because people expect the cedi to appreciate, or to be stable, they will not hoard foreign currencies like the dollar, pound or euro.

“They will shy away from using it [currency] as a store of value because you know that they will lose,” he said.

The cedi last week was trading at GH¢4.50 before the general elections but is currently trading at GH¢4.11, an appreciation that has been attributed to the successful conduct of the elections.

Watch the full TV programme that aired on the Joy News channel on Multi TV in the video link below.