Business confidence hits a low point in Ghana
Ghana’s economy is slowing down amid fears heightened fears of a growth in inflation, the country’s central bank governor Henry Kofi Wampah has warned.
Wampah said the bank’s Composite Index of Economic Activity (CIEA), which measures the pace of economic activity, had declined by 0.6 percent in May after a 14.8 percent growth in March.
The period also saw all the components of the CIEA recording negative yearly growth rates with the exception of tourist arrivals, domestic VAT and DMBs’ credit to the private sector.
“The pace of growth in credit to the private sector has also moderated, while the credit stance of banks has tightened,” Wampah said in his the monthly monetary policy report presented on Wednesday.
The Business Confidence Index declined to 99.0 in March 2013, from 104.1 in December 2012.
Wampah attributed this partly to the energy crisis, which he said had lowered business confidence.
“Similarly, the Consumer Confidence Index also fell to 96.1 in April, from 105.0 in January 2013,” he added.
The central bank chief said Ghana’s trade deficit had also widened on the back of a significant deterioration in exports.
“This was on account of low international commodity prices, which have fed through to lower exports receipts, despite imports remaining broadly flat,” Wampah said.
“The combination of these factors have resulted in heightened exchange rate pressures in the foreign exchange market, although at a measured pace relative to 2012.
“Inflation has also gone up for the third consecutive month, raising the central path of the forecast by a percentage point.”
He said the fiscal perfomance for the first quarter also pointed to significant revenue shortfalls although expenditures remained within targets.
However, Wampah said the government had put in place measures to address the revenue shortfalls and rationalise expenditures including a freeze on new projects.
He said the government had initiated a programme to restructure its debt by substituting the high cost of short-term debt with longer-term instruments.
“This is expected to help reduce the high interest payments,” Wamphah said.