Stephen Odoi-Larbi
13 January 2009
Investors in the country have bemoaned the gloomy state of the economy which has been underpinned by the gradual rise of inflation trends, falling oil prices, collapsed capital market and above all the depreciation of the Cedi against major currencies in the foreign exchange market.
Many Investors in the country have expressed concern about how the Cedi has of late been faring against major currencies and the Bank of Ghana's inability to tighten monetary policies to ensure its strong performance against the other currencies in the foreign exchange market.
The Cedi at the close of business last Friday, depreciated against most of the internationally traded currencies -namely the US dollar, the British Pound, the Euro and the Japanese Yen by 1.27%, 6.56%, 0.99% and 3.05% respectively. It, however, appreciated against the South African Rand by 1.33%.
The trend of inflation during last year was not encouraging as it kept on rising month after month, under review. The highest inflation rate the country witnessed during the year was in June, recording an 18.4 percent year-on-year.
From there, the trend started to fall until during the last quarter when it again started to inch up, recording 17.4 percent in November to 18.1 percent in December, an almost 1 percentage point increase over the previous month.
The trend, according to the Government Statistician Grace Bediako, pushed up local prices for imported goods, making consumers spend higher.
Business analysts attributed the rise of inflation to the fall of the Cedi which lost a quarter of its glory in 2008.
The situation, according to the Investors, if not controlled would mar the operations of many businesses in the country. Already, many businesses have signalled their inability to cope up in the capital market, a signal which clearly indicates their stand to fold up if the trend continues.
With the global credit crunch threatening the Developing countries this year, there is a serious concern of job cuts, which many believed would derail the economic success that this country has made.
"The rate with which the dollar and the pound are growing against the Cedi is worrying. This means you will have to exchange more of our currency (Cedi) before you can embark on any business transaction outside the country. If this happens, it is the final consumer who suffers. This is not good for a developing nation like ours and the new government must react now", noted Paul Yeboah, a second hand shoes dealer.
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