Data from the Bank of Ghana show that consumer and business confidence in the general economy has been declining since the end of 2020.
Since January 2021, both the consumer and business confidence indices have continuously fallen below the 100-point threshold.
The business confidence index averaged 88.19 during this time, while the consumer confidence index averaged 86.13.
The consumer and business confidence indices, meanwhile, hit record lows of 73.9 and 72.6 in October 2022, respectively. Indicators for consumer and business confidence increased to 79.2 and 75.7, respectively, in December 2022.
The decreases in ex-pump gasoline prices and transportation costs in December 2022, according to the Bank of Ghana, led to an improvement in consumer confidence.
Following the appreciation of the local currency during the month, business confidence also improved as a result of short-term goals being met and optimism regarding company and industry prospects.
The Consumer Confidence Index (CCI) gauges consumers’ optimism or pessimism with regard to their anticipated financial situation.
The CCI is based on the idea that optimistic consumers will spend more and boost the economy, whereas pessimistic consumers’ spending habits may cause a slowdown or recession.
The Organisation for Economic Co-operation and Development (OECD) states that an indicator above 100 indicates an increase in consumer confidence regarding the future state of the economy, which makes them less likely to save and more likely to spend on major purchases.
Values below 100 indicate a pessimistic outlook for the economy’s future developments, which may lead to a propensity to save more and consume less.
Based on opinion surveys on changes in production, orders, and stocks of finished goods in the industry sector, the business confidence index forecasts future developments.
It can be used to track output growth and foresee when the economy will turn.
Real Composite Index of Economic Activity for Ghana (CIEA)
The Real CIEA of the Bank of Ghana also exhibits a decline in annual growth, reaching a record low of -6.2% in November 2022. This is a sign that the outlook for the domestic economy is getting worse.
This indicator changed from 39.4% in April 2021 to 10.2% in November 2021 and then moved to -6.2% in November 2022.
