UNCHARTED ECONOMIC WATERS

Corporates continue to navigate the prevailing economic trials and tribulations

Businesses enter February with a sense of trepidation, uncertain about what the near term holds. This uncertainty is reflected in the latest LMD-PepperCube Business Confidence Index (BCI) survey.

In mid-January, a team from the IMF arrived in the country to assess the progress of economic reforms, following the institution’s completion of its first review under the Extended Fund Facility (EFF) arrangement.

Simultaneously, the World Bank projected the local economy to grow by 1.7 percent in 2024 and 2.4 percent next year – and the bank noted that the economy contracted by 3.8 percent in 2023.

THE ECONOMY Amid these developments, 25 percent of BCI survey participants express optimism about the economy ‘improving’ in the next 12 months, marking a four point increase from December (21%).

Meanwhile, 19 percent anticipate the economy to ‘stay the same,’ reflecting a three percentage point reduction from the previous month. And 56 percent anticipate the economic situation will ‘get worse,’ marking a one percent drop from December (57%).

SALES VOLUMES Optimism was rife in January for sales volumes over the next 12 months: twenty-nine percent of respondents expect sales volumes to ‘get better,’ indicating a two point increment compared to the preceding month.

Just over one in five respondents (21%) anticipate their numbers will ‘stay the same,’ which represents a slight decrease from the previous 27 percent.

The proportion of executives expecting sales volumes to ‘get worse’ rose to 50 percent – up from 46 percent in the prior month.

Furthermore, only 23 percent of respondents report ‘increased’ sales volumes over the past 12 months, reflecting a decline from December’s 29 percent.

Nineteen percent report that their numbers ‘stayed the same’ – up six percentage points from 13 in the preceding month. And 58 percent aligned with December’s outcome vis-à-vis ‘decreased’ volumes.

In relation to the three months ahead, there’s pessimism regarding sales volumes ‘getting better’ with 22 percent saying so – that’s a marginal decline from the 26 percent recorded in the previous month. On the other hand, over a quarter (28%) believe that sales volumes will ‘stay the same,’ which represents an increase of three percentage points from December.

However, overall sentiment remains subdued with half (50%) of those polled expecting their sales to ‘get worse’ in the next three months.

INVESTMENT CLIMATE Optimism regarding the investment climate is on the rise – albeit ever so slightly – with three percent polling ‘very good,’ which is one percentage point more than in December.

However, the proportion stating that prospects are ‘good’ dropped to seven percent (from 12% in the previous month). But overall, a majority of executives (66%) still perceive the investment climate as being ‘poor’ or ‘very poor.’

EMPLOYMENT PROSPECTS The sharp increase in December (31%) has eased with only 28 percent expressing an intention to add to their workforce.

And two-thirds (66%) plan to maintain current staff levels while six percent expect to downsize over the next six months – that’s a decrease from 12 out of 100 respondents in the month prior.

– LMD