Supply chain reactions to inflation and exchange rate volatility in Ghana

Ghana’s economy faces susceptibility to external shocks due to its heavy reliance on imports, making it sensitive to price fluctuations that affect government revenue. The historical depreciation of the currency has also hampered economic growth and fiscal stability. Traditional economic wisdom suggests that services generate fewer well-paying jobs compared to production, but a novel concept called the ‘supply chain economy’ challenges this notion. This research delves into the supply chain’s response to inflation and exchange rate volatility in Ghana, where an 8% inflation target guides monetary policy to curb expenses, reduce poverty, and sustain economic growth. Employing statistical methods like generalised autoregressive conditional heteroscedasticity and autoregressive distributed lag co-integration, the study explores the relationship between exchange rates and inflation. It reveals that variables like GDP, foreign direct investment, private market loans, and infrastructure spending significantly impact export efficiency in both the short and long-term. Additionally, including imports from the manufacturing industry results in negative inflation. This research provides valuable insights into the entire supply chain within domestic and international economies, particularly in the context of economic variables’ influence on procurement supply chain dynamics.