Business confidence as measured by the index derived from the Bank of Ghana’s (BoG) Business Confidence Survey has recorded a dampening in the confidence of the business sector.
Following the improved sentiments of business at the end of 2018 to 97.3 percent from 95.1 percent in October 2018, the first survey conducted in February 2019 has shown a marginal decline to 93.5 percent.
The Survey, which forms part of the central bank’s real sector indicators, depicts a weakening that represents a 3.8 percentage point’s decline as compared with the recovery in the confidence of businesses at the end of 2018 a reflected by a 2.2 percentage points increase in the index.
The survey, in February 2018 depicted a better business sentiment at 101.0 percent.
This economic indicator measures the amount of optimism or pessimism that business managers feel about the prospects of their companies, as well as providing an overview of the state of the economy.
The dampening in confidence has largely been attributed to cedi depreciation as well as the latest signs of power outages.
The Cedi came under pressure against the major international currencies in February and March 2019, reflecting episodic depreciation similar to what was experienced in May-June 2018. By March 19, 2019, the cedi’s depreciation had peaked at 8.0 percent, compared to a marginal depreciation of 0.02 percent in the same period of 2018.
Consumer Confidence
In sharp contrast, the consumer confidence survey depicted improved confidence as reflected by an 0.3 percentage point rise in the confidence index to record 98.6 percent, following a consistent growth from 92.3 recorded in October 2018.
The Consumer Confidence Survey reflects prevailing consumer sentiments as expressed by households and likely developments in those sentiments for the months ahead.
Composite Index
The Bank’s updated Composite Index of Economic Activity (CIEA) also picked up, although at a slower pace than in 2017. The CIEA real index recorded an annual growth of 3.2 percent in January 2019, compared with 3.6 percent for the same period of 2018. This suggests that the year has started with faster economic growth than 2018 since the BoG’s CIEA tends to closely mirror the Ghana Statistical Service’s official GDP growth measurements.
By Joshua W. Amlanu
