Business, consumer confidence up but economic activities slow – BoG

Both business and consumer confidence in the Ghanaian economy surged in the first two months of the year, the Bank of Ghana (BoG) has said in its March 2020 Monetary Policy Report.

The Central Bank’s Consumer Confidence Survey conducted in February 2020 reflected some consumer optimism about the economy.

As such, the consumer confidence index improved to 100.7 in February 2020 from 98.8 in December 2019.

The pickup in consumer confidence was driven by slower movement in consumer prices, improvement in current economic situation, current household finances as well as consumer willingness to purchase household durables.

At the same time, the Business Confidence Index rose to 101.4 in February 2020, from 96.6 in December 2019.

The improvements in business sentiments, the BoG said, was largely influenced by the relative exchange rate stability as the cedi appreciated against the major trading currencies over the period.

Other factors included favourable company prospects, positive industry prospects, and slower pace in the movement of prices.

However, the January 2020 update of the Bank of Ghana Composite Index of Economic Activity (CIEA) showed evidence of a slower pace of economic activity.

The index grew by 2.4% in January 2020, compared to 6.4% a year ago.

The marginal growth in the CIEA the Central Bank said was attributed mainly to Deposit Money Bank’s Credit to the Private Sector and Domestic VAT.

In contrast to the strong growth outcomes in recent year, the outbreak of COVID-19 and its disruptive effects on economic activity is set to affect the growth outlook for 2020.

Among others, the dampened global demand could significantly impact Ghana’s crude oil export earnings with major implications for foreign inflows and tax revenues, the report emphasised.
The BoG added that there is also a likelihood of export restrictions from advanced economies and other emerging market economies which could create supply chain shortages for Ghanaian businesses, with significant impact on imports of intermediate and capital goods, as well as consumption goods.