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KPMG estimates negative economic impact of Covid-19 on Ghana

By Justice Kofi Bimpeh
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KPMG has in its latest report estimated some negative impact of Covid-19 on the Ghanaian economy.

The report which was centred on the economic impact and implication of Covid-19 on Ghana estimated negative impact in some sector of the economy.

The sectors estimated to be affected include; the Hospitality industry, Agriculture, Investment, Health, Trade and Industry and the Fiscal impact. 

On the hospitality industry, the report said " 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 cashflow of hotels, restaurants, bars, pubs and nightclubs will experience decline significantly.

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KPMG has also indicated that the primary balance of the Ghanaian economy will worsen due to the Covid-19 pandemic.

"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 GHS 9.5 billion."

But the effect of the Covid-19 will see the primary balance of the economy worsen from a surplus of GHS 2.8 billion to a deficit position of GHS 5.6 billion.

According to the report, trade volumes both domestic and international are reducing especially with China which constitutes the highest of Ghana's imports and the second-highest of Ghana's exports.

Therefore the decline in international trade will result in a reduction of expected import duties.

KPMG also estimates that the investment sector will also be greatly affected. The report noted that"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."

READ ALSO : Covid-19 could lead to shortage in food supply and general inflation of food prices 

This trend they believe is expected to worsen as the level of uncertainty increases going forward.

The report noted that if the pandemic intensifies, it could lead to a shortage in food supply and general inflation of food prices.

Parts of the report that focused on Agriculture indicated that " the general agriculture sector is also expected to experience an adverse disruption in the supply chain coupled with lower demand activities.

Full report below :