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Johannesburg - The groundswell of confidence in the SA economy during the last five years had been wiped out, almost as if we were living in another country.
This is the startling conclusion of the Market Sentiment Index (MSI), an economic barometer which is conducted by marketing and social insights company, TNS Surveys. The surveys poll SA's metropolitan areas.
The index dropped another 18 points in June - its second consecutive drop of this magnitude - to 109 points from 127 points in the first quarter of 2008. June's decline also represents the index?s lowest ebb since 2002. By way of comparison, the index stood at 140 points in June 2007.
"The drop of 18 points is the largest ever drop in the index since the MSI has been tracked (May 2002) and the combined drop of 36 points over the last two readings in the fastest fall ever recorded," said Neill Higgs of TNS Surveys.
"What is even more significant is that at the end of November 2007, the index was standing very close to its all-time high of 147," he said.
"This means that the last six months has seen all the gains made in the last five years - in what is essentially a barometer of the confidence people have in the economy - wiped out," Higgs said.
High food and fuel inflation, as well as rising interest rates, were key contributors to feelings of negativity.
Other research conducted by TNS Research Surveys during the first six months of 2008 showed that January's load-shedding not only affected two-thirds of people financially, but it was also perceived to have a negative effect on the economy.
"In addition, we see President Mbeki's approval rating continuing to drop quite sharply," said Higgs who added there were also serious concerns over the prospect of Jacob Zuma as a future leader.
"Add to that xenophobic violence, the disastrous elections in Zimbabwe and perceptions around crime: it is unlikely that the index will recover in the short term," said Higgs.
Almost all components of the index showed declines in February, with the largest being:
serious concerns about current business conditions (-26 points);
serious concerns about people's personal current economic circumstances (-19 points);
an expectation that people's personal economic circumstances will be much worse in six months' time (-15 points); and
a continuing increase in pessimism in terms how people are feeling about business conditions in six months' time (-14 points).
Large drops were recorded for all race groups. However, the figures for whites and Indians/Asians reached new all-time lows.
- Fin24.com