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Johannesburg - A timid recovery in business confidence is worrying the SA Chamber of Commerce and Industry (Sacci), which says the recession has led to a reserved and cagey environment.
Sacci's BCI - a composite weighted index of 13 sub-indices - dipped 2.3 index points to 81.2 in January 2010 from the month before. Compared to January 2009, the index is 1.2 index points lower.
"The tentative recovery of business confidence in South Africa is cause for concern, especially among the peer group of emerging market economies," said Sacci after the release of its business confidence index (BCI) for January 2010.
Sacci said a restoration in confidence is key to economic growth.
It said strong final domestic demand, a turn in the inventory cycle and the recovery of international trade are driving a robust recovery in many emerging and developing economies, but have yet to support a rebound in the South African economy. "The consequences of the recession may still pervade the domestic economy and contribute to the reticence in the business environment as well as in business confidence."
In South Africa, relentless declines from a level of 85 in the third quarter of 2006 to a low of 23 in the third quarter of 2009 were recorded by the Rand Merchant Bank and Bureau of Economic Research (RMB/BER) business confidence index, a quarterly business survey.
"The BCI lost positive momentum over the festive season, but the setback may be temporary given improved prospects for recovery."
Internationally, an increasing number of signs point to a rebound in the United States economy, but the first-quarter 2010 Leeds Business Confidence Index suggested that a faster recovery will follow later in 2010. In China, business confidence jumped to 127.7 in the fourth quarter from 120.1 in the third quarter.
The Institute of Chartered Accountants in England and Wales reported that confidence among British businesses has climbed to a six-year high. The Business Confidence Monitor survey showed a 24.6 points rise for the fourth quarter.
- Fin24.com