Governor of the Bank of Ghana, Dr. Johnson Asiama, has raised concerns over what he describes as a widening mix of external and domestic risks confronting the country’s economy, warning that failure to address them could reverse recent macroeconomic stability gains.
Speaking at the opening of the 130th Monetary Policy Committee (MPC) meeting, the Governor said global energy developments and domestic structural challenges are emerging as key pressure points for the economy.
He noted that the ongoing conflict in the Middle East remains a major external risk factor, with sustained increases in global oil prices posing inflationary threats to Ghana’s economy.
“The protracted Middle East conflict and sustained energy price elevation are all risks which, if not addressed, could dislodge inflation expectations before they are firmly anchored,” Dr. Asiama stated.
According to him, rising crude oil prices are already feeding into transport costs and general price levels, given Ghana’s status as an energy-importing economy.
Dr. Asiama also warned that external shocks are now intersecting with domestic vulnerabilities, particularly in the energy sector, creating what he described as a dual-channel inflation pressure.
“The convergence of domestic energy supply disruptions and external cost push pressures… could create a dual-channel inflation expectations problem,” he cautioned.
He stressed that inflation expectations, which are currently showing signs of stabilisation, could become unanchored if these pressures persist without effective policy response.
On external sector risks, the Governor pointed to vulnerabilities in the current account balance and foreign reserves, noting that global developments could weaken export earnings and reduce foreign exchange inflows.
He further highlighted fiscal risks arising from potential revenue shortfalls linked to global economic slowdown and commodity price volatility.
Dr. Asiama also drew attention to challenges in the power sector, saying intermittent supply issues continue to affect production costs and contribute to inflationary pressures.
“Although the power situation is showing signs of abatement, it continues to elevate business costs and consumer inflation expectations,” he said.
He added that the Bank of Ghana is closely assessing the effectiveness of monetary policy transmission, particularly its impact on lending conditions and credit growth in the economy.
“The current monetary policy transmission is still of concern,” he noted, questioning whether policy adjustments are adequately influencing credit expansion and broader economic activity.
According to him, the outcome of these assessments will play a key role in shaping future monetary policy decisions.
The Governor emphasised that Ghana’s economic outlook now depends on how effectively policymakers manage both global shocks and domestic structural constraints.
“These risks will be central to the discussions this week,” he said, adding that sustaining recent recovery gains will require decisive and coordinated policy action.
Source: Wesleyannews.com
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