Johannesburg - The worst of the South African recession is over and positive economic growth could occur as early as the third quarter of this year.
This is according to the RMB/Bureau for Economic Research Business Confidence Index (BCI) for the third quarter, which was released on Wednesday.
The BCI actually fell three points quarter-on-quarter to a reading of 23 and now stands at its lowest level in 10 years.
However, RMB chief economist Ettienne le Roux said the bigger picture of the economy is "not so bad".
"The actual decline in the index is small. For example, between the last quarter of 2007 and the start of 2008 the index fell 19 points," said Le Roux.
"The worst is behind us," he added.
Le Roux said that three of the five sectors accounted in the index showed positive growth. These sectors are new motor trade, manufacturing and building contracts.
Confidence in motor trade has been increasing steadily over the past three quarters, however the current reading of 19 shows that conditions are still tough.
"Only two out of ten car dealers are happy with trading conditions at present," said Le Roux.
Meanwhile, confidence in the manufacturing sector has doubled from the second quarter. This is thanks to higher domestic sales and a bounce from a very depressed level in the second quarter.
The sectors that showed declines in confidence were wholesale trading and retail.
Retail confidence dropped on tight trading margins. Retailers are unable to raise prices because consumer demand for semi-durable and durable goods remains weak.
"The consumer is not going to bounce back as if nothing has happened," said Le Roux, adding that household demand is unlikely to see a major recovery in the next few quarters.
"Given the importance of the consumer in overall demand, the overall recovery of the economy might not be as strong as we have seen in other upswings," he said.