Johannesburg - South African CEOs have diminished confidence
in the economy's growth, the Merchantec CEO Confidence Index released on
The index weakened in the fourth quarter of 2012, dropping
by 5.8% to an overall score of 52 points.
The basic materials sector experienced the sharpest decrease
in confidence, falling by 16.2% following recent labour unrest.
Overall, sentiment decreased in all sectors, with the
exception of the financial services sector, which increased in confidence by
Sixty-five percent of South African CEOs believed the
country's 2013 Gross Domestic Product (GDP) figure would not exceed Treasury's
revised 2012 growth forecast of 2.5%.
"This lack in confidence stems from South Africa's
weakening business and investment climate, the slowdown in Asia's economic
growth prospects and prolonged economic uncertainty in the eurozone," Rami
Avivi, an associate at Merchantec Capital said.
The survey collates responses from over 150 CEOs, mostly
from listed companies. It provides a leading indicator into how business heads
perceive local market conditions and the economy.
Collectively, CEOs expressed concerns regarding the
country's political instability and high levels of corruption, Avivi said. They
were concerned about labour unrest and its potential to spread to other
The basic materials sector recorded a 16.2% drop in
confidence for the fourth quarter of 2012, the largest decline in confidence
for the sector to date.
CEOs were not confident with their companies' growth
There was a 27% decrease in confidence for planned company
investment and a 22.2% decrease in confidence for the availability of debt
Overall confidence in economic conditions decreased by 14.7%
quarter-on-quarter, to a score of 41.2, the largest decline of all components
of the index.
This negative sentiment was driven by CEOs in the basic materials,
consumer services, industrials and technology sectors.
"Internationally, the continued uncertainty and slow
recovery in Europe, South Africa's major trading partner, is having a dampening
effect on local exports," Avivi said.
Merchantec Capital is an independent corporate finance and
research company and an approved, designated adviser and sponsor to AltX and