Economist and political risk specialist Dr Theo Acheampong says Ghana now has stronger financial buffers to withstand global economic shocks, pointing to improved reserves and a stronger external position.

Speaking on Joy News’ PM Express Business Edition on Thursday, Dr Acheampong said the global economic environment has become far more volatile, necessitating stronger internal resilience for countries.

“Gone are the times when every maybe 10 or so years, you would have a major geopolitical event. But what the last few years have taught us is that you should expect these things much more often than not.”

He said recent global crises have demonstrated how quickly geopolitical tensions can disrupt economies.

“We’re just coming off. In fact, we’re still in Russia, Ukraine, and then the initial period, the shock that was sent to the whole world with the inflationary spike, and then the cost of living pressures, and then related governments having to make, you know, certain adjustments.”

According to him, Ghana’s deep integration into the global economy means external shocks will inevitably affect the country.

“But if you look at the situation that we’re in now, where you expect these geopolitical events to be much more pronounced, and number two, the fact that the Ghanaian economy now is heavily integrated as part of the global ecosystem, for sure, you would see some of these pass-through effects come.”

He said the key issue for policymakers is how countries respond internally to these external pressures.

“What then is interesting and important is, if you assume that geopolitical uncertainty is the order of the day, what do you do as a country to respond to that?”

Dr Acheampong explained that economic management and fiscal discipline are central to strengthening resilience.

“What you have control over is what you do internally. So what you do internally becomes two or three things: what you do in terms of your fiscal performance, how you overmanage the overall economy.”

He recalled that Ghana’s vulnerability to external shocks became evident during the global disruptions triggered by the Russia–Ukraine war.

“So remember that when we entered the 17th IMF program, there was a statement that the fund issued in the May 2023 report that Ghana had underlying fiscal vulnerabilities.”

He said those vulnerabilities meant the country felt the shock more severely than expected.

“That is why, when Russia-Ukraine happened, we felt the impact much more than we should have, and at one point, you even had the import covers around two weeks or so of reserves.”

However, Dr Acheampong said the situation has improved significantly since then.

“The situation is completely different now than it was in 2022/23.”

“There has been more stability within the Ghanaian economy, and the biggest indicator of your ability to withstand some of these shocks, really comes down to looking at your trade balances.”

He said recent data from the Ministry of Finance and the Bank of Ghana show significant improvements.

“If you look at those numbers, and you actually compare where we were a few years ago to where we are now, your import cover is around 5.7 months, and that is still growing.”

He also highlighted a positive trade balance as a key factor strengthening the country’s position.

“The net trade balance is around a positive 1 billion every month. And then, if you look at the current account, is around $750 million or so.”

Dr Acheampong said these improvements reflect stronger export earnings, particularly from gold and non-traditional exports.

“So the difference is one; however, you’re also getting more from the gold side, and then you’re getting more even from your non-traditional right exports.”

All these factors, he said, are strengthening Ghana’s ability to deal with global economic turbulence.

“So all of this translates into a much better, improved external position for Ghana, and our ability to actually able to withstand the shocks relative to where you were a few years.”

Responding to whether this means Ghana now has buffers against global shocks, he said the country has begun building financial cushions.

“We have some savings to be able to help address these shocks if the pass-throughs come.”

But he stressed that more work is still needed to strengthen the economy.

“Of course, you have to do more.”

He added that the first impact of global shocks is often felt through external trade indicators.

“But what I’m saying is that your first line of impact with these global events and these shocks would come, you would feel it immediately from the external side and your trade balances, your current account.”

Dr Acheampong maintained that the country’s current reserves position offers stronger protection than in previous years.

“And we are in a much better position now from what we have in terms of reserves to be able to augment or support or withstand the shocks.”