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Business confidence ratchets up

Johannesburg - Business confidence showed a slight increase in November compared to October, according to the SA Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) released on Thursday.

The BCI moved up by 1.1 points to 81 in November, after retreating to 85 in October, Sacci economist Richard Downing told media in Johannesburg.

Looking at the general trend of the BCI over the year, Downing said it was "ratcheting up very slowly" but "will remain bumpy with lots of uncertainty".

The index appears to have established itself around the 87 level and will remain in positive territory when compared year-on-year, Sacci said.

The BCI is compiled from 13 sub-indices.

Five of seven sub-indices on physical (real) economic activity had a negative impact on the BCI in November 2010, compared to the previous year.

Four of the six sub-indices reflecting on the financial environment were positive on an annual basis.

This might have a positive impact on the real economy.

Downing said there were three major issues that played a role in confidence in November.

Firstly, the "Irish problem" about which South Africa cannot do anything. This would have an effect on Europe, South Africa's second major trading zone.

"So it will have a negative effect on South Africa."

The second issue was the new growth path economic strategy announced by Economic Development Minister Ebrahim Patel last month.

"It could have quite serious effects on the economy if not handled properly," said Downing.

Thirdly, the 50 basis-point rate cut could have implications for the economy.
 

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