Above Potential Performance in Agriculture and Service Sectors improve Business Climate with a more Optimistic future

The Business Climate Index (BCI) slightly improved from 95.61 in the previous quarter (January-March 2019) to 100.28 in the current quarter (April-June 2019). These changes were largely driven by improvement in performance in the agriculture and service sectors. Favourable business perceptions in the agriculture sector are attributed to improved late season rains which lifted crop prospects in different parts of the country. The positive effects of rainfall on business climate were bolstered by improved perceptions of sales turnover, increase in business activity, incoming new business, reduction in inputs cost, and general business optimism during the quarter. Moreover, perceptions about future business sentiment (June–September2019) indicate further improvement in business performance largely driven by anticipated increase in sales turnover, business activity, labour availability, reduction in input cost, reduction in labour costs, and increase in profitability of businesses. Business sentiments across all sectors are expected to remain above potential in next quarter (June–September2019).