The Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana has released a report that highlights the causes of increasing labor unrest, elevated business costs, and the collapse of some businesses.
According to the report, the high foreign exchange rates and inflation are the primary factors responsible for these economic challenges. The report also states that the high cost of electricity and fuel are contributing factors to the economic challenges.
Despite the increased volatility in 2024, the cumulative depreciation rates were relatively lower.
The report urged the government to take further steps to reduce the rate of cedi depreciation against major trading currencies and to increase exports to lessen the demand for foreign exchange.
The report also recommended that the central bank enforce foreign exchange regulations more strictly and increase its presence in the exchange rate market. With respect to inflation, the report referenced June 2024 inflation, which decreased to 22.8 per cent, adding that it represented a significant drop from the peak of 54.6 per cent in December 2022.
The report stated that, while the inflation rate has decreased from the peak, it is still high when compared to the inflation rate of 12.6 per cent in December 2021.
The report urged the government to examine the commodities driving inflation and commit to addressing the underlying factors.
For example, the report noted that improving the road network in areas designated as the food basket of Ghana and reducing foreign exchange rates can help lower transportation costs and fuel costs, which would in turn reduce food and non-food inflation to single digits.
