For a fourth consecutive time business confidence, as measured by the central bank’s latest confidence survey, has declined on the back of concerns about price pressures, currency depreciation and weakening consumer demand. This largely signals a negative outlook on the growth prospects of businesses on the back of existing economic conditions. The central bank’s latest business confidence survey in August 2022, which gauges the level of optimism among business managers, revealed a slump in business confidence by a greater extent of 15.8 points from 98.4 points recorded in the previous survey of August 2021. At the moment, business confidence has returned to pandemic-era levels – reaching its lowest since June 2020. Chairman of the Monetary Policy Committee (MPC) and Governor-Bank of Ghana, Dr. Ernest Addison, noted that business sentiments declined on the back of current macroeconomic concerns. “Business sentiments softened on the back of concerns about price pressures, currency depreciation and weakening consumer demand,” the Governor said. Similarly, the survey findings were broadly in line with an observed downturn in Ghana’s Purchasing Managers’ Index (PMI) in August 2022 at 45.9. According to S&P Global, Ghana’s Purchasing Managers’ Index (PMI) posted below the neutral value of 50.0 for the eighth month in succession, indicating a deterioration in business conditions. At 45.6 in September, down from 45.9 in August, the latest reading was the lowest since April 2020. Per the S&P Global Ghana PMI, the final month of third-quarter 2022 revealed a solid deterioration in business conditions for Ghana’s private sector. Output fell markedly, and at the quickest rate since start of the pandemic in March and April 2020. New orders meanwhile fell precipitously, but more slowly. For the third month in a row, businesses reduced headcount in response to weak market conditions. Despite this, businesses had positive outlooks for longer-term output growth. Inflationary pressures increased once more in September to 33.9 percent, with businesses frequently attributing price increases to unfavourable changes in the dollar’s exchange rate. Results from the Bank’s August 2022 confidence surveys also showed further softening of consumer sentiments on account of rising inflation. Economic growth The most recent high-frequency statistics from the Bank of Ghana indicated some deceleration of economic growth. In July 2022, the Composite Index of Economic Activity (CIEA) showed annual growth of 0.5 percent, down from 1.6 percent in June and 5.0 percent in December of the previous year. The slowdown was caused by port and construction-related activity. In addition, the most recent poll on credit conditions – performed in August 2022 – revealed a net overall tightening of commercial banks’ credit policies toward consumers and corporations. The average lending rates are steadily rising as a result. Due to persistent price pressures, private sector lending expanded… albeit barely to 1.4 percent. In contrast, the same time in 2021 saw a 0.2 percent decrease.