The Business Climate Index declined and remained well below potential by 22.12 percentage point to 70.93 during the current quarter (April – June 2017) from 93.05 in the preceding quarter (January – March 2017). This is the eighth consecutive quarter that the business climate index has indicated unfavourable business performance and is largely explained by low demand that has led to collapse of some retailers key among them Nakumatt Supermarket and poor performance of the agriculture sector due to persistent adverse effects armyworms invasion. This calls for monetary policy responses to improve aggregate demand and fiscal policy interventions to combat the effects of the armyworm. Nevertheless, the future outlook (July – September 2017) remains favourable driven by rising profits margin, new business opportunities and favourable input cost in the agricultural sector and increased capacity and reduced labour cost in the service and manufacturing sector.