Business confidence dampens in June 2019

Business confidence as measured by the index derived from the Bank of Ghana’s (BoG) Business Confidence Survey for June 2019 has shown dampened sentiments in the confidence of the business sector.

The business sector confidence index slowed to 94.1 percent, following a recovery in the index based on the survey conducted in March 2019 at 94.3 percent.

The dampening in confidence is largely attributed to cedi depreciation during the month of June, when it further depreciated, year to date, from 5.75 percent in May 2019 to 8.35 percent in June 2019. This was the sharpest cedi depreciation since the first ten weeks of the year, after which the currency had more or less stabilized, until June.

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.

Consumer Confidence

In contrast, the consumer confidence survey picked up significantly, reflecting a 3.2 percentage point rise in the confidence index to record 99.2 percent. Some analysts attribute this to increased liquidity in the economy. Broad money measured by M2+ grew by 22.3 percent year on year up from 13.0 percent over the previous 12-month period.

This uptake in consumer confidence reflects an optimism about current and future economic conditions, said Dr Ernest Addison, Governor, Bank of Ghana (BoG).

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 reflected strong uptick in economic activity. The updated CIEA recorded a growth of 3.2 percent year-on-year in May 2019, compared with a 2.2 percent growth during the same period last year. Although the CIEA measure economic activity rather than economic output used by the Ghana Statistical Service to measure Gross Domestic Product growth, the one tends to be closely correlated to the other. While the CIEA this year represents an improvement over the corresponding period of 2018, in line with GDP data for the first quarter of this year, the latest data from the BoG warns of a slowdown in the economic growth rate since the first quarter when GDP growth, year on year was computed was 6.7 percent.