BoG survey reveals economic slowdown

Bank of Ghana three latest survey all reveal a slowdown in economic activities and dampening of both business and consumer confidence.

The latest Composite Index of Economic Activity (CIEA) shows that the construction sector, exports, Social Security and National Insurance Trust (SSNIT), manufacturing, electricity and imports have pushed the composite index down.

According to data from the Central Bank, economic activity contracted during the first quarter of the year, in contrast to the high growth rate recorded in 2012. The real CIEA contracted 0.6 percent on a year-on-year basis in the first quarter of 2013 compared with 14.8 percent growth observed during the same period of 2012.

A disaggregation of the index shows that all the CIEA components contracted with the exception of Tourist Arrivals, which went up by 7.4%, Domestic VAT up by 10.3% and Deposit Money Bank credit to the private sector up by 17.5%. The other components contributed significantly in weighing down the overall index. These were construction sector down by 2.5%, exports down by 9.1%, SSNIT contribution down by 35.9%, sales of key manufacturing establishments down by 2.9%, industrial consumption of electricity and by inference industrial production down by 3.5%, and imports down by 9.9 %.

According to the Central Bank, the low commodity prices were dragging down export receipts while the energy sector challenges observed over the past three quarters were impacting negatively on real sector activities.

The latest BoG’s surveys showed marked softening in consumer and business confidence, heightened inflation expectations and tighter credit stance by commercial banks, all of which provide conditions that could exert downward pressure on aggregate demand.

The overall Business Confidence Index declined to 99.0 in March 2013, from 104.1 in December 2012. This was partly due to the energy sector challenges which lowered business optimism about growth prospects and heightened inflation expectations over the medium-term horizon.

Accordingly, the survey showed weakened prospects for company profit, industrial and economic growth, as well as lower realization of expectations relative to the same period in the previous year. The Consumer Confidence Index also fell to 96.1 in April, from 105 in January 2013.