About 46 per cent of Ghanaian Business Executives expect the overall business environment to improve in the third quarter of 2010.
This is far less than 66.7 percent of executives, who did so in the second quarter, the Association of Ghana Industries (AGI) survey has shown.
According to the second quarter Business Barometer conducted from June 21 to July 2, 2010, the CEOs optimism is based on an expected improved
market, availability of private sector projects and continuous decline of inflation in the next quarter.
However, 23 percent of the respondents expect the business environment to worsen because of increase in utility prices, declining
purchasing power of consumers and lack of market.
High cost of raw materials was the topmost concern of industry,overtaking cost of credit for the first time in four quarters while high utility prices moved from 10th position in quarter 1 to 2nd position in quarter 2, largely as a result of increases in utility tariffs in June.
"This is a worrying development as increasing cost of raw materials renders businesses operating in the country less competitive," the report said.
Overall, the top three challenges facing businesses operating in the country include high cost of raw materials, high utility tariffs and cost of credit.
Access to credit for the first time in four quarters dropped from the top three to the sixth position while inflation did not show up at all in
the top ten.
"This development is consistent with the happenings in the economy as inflation has declined from 13.3 percent to 9.5 percent at the end of June this year," the survey noted.
Of the sector challenges, high utility prices, high level of taxation and cost of credit were identified as key challenges hindering growth of the service sector.
On manufacturing, competition from imported goods, cost of raw materials and high utility tariffs emerged as the top three challenges
facing the sector.
The agriculture sector is still facing the challenge of access to credit, cost of credit and high cost of raw materials.
The AGI Business Barometer, which measures the level of confidence in the business environment recorded a negative value of (-0.21), an indication of the low confidence in the economy under the survey period.