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South African business confidence increased from the lowest level in more than three decades in September and may continue to rise if the nation’s upcoming medium-term budget sets the stage for an economic recovery.
A sentiment index compiled by the South African Chamber of Commerce and Industry climbed to 92.4 in September after falling to 89.1 the previous month, the business group said in an emailed statement Wednesday. The median estimate of three economists in a Bloomberg survey was for 89.
Key Insights
- Improved sentiment suggests the economy, which is stuck in its longest downward cycle since 1945, may have hit a trough, the chamber said. “Decision makers on economic policy should use this window of opportunity to further stabilize the economic situation and provide platforms for sustainable growth.”
- Finance Minister Tito Mboweni is expected to announce plans to steady the nation’s finances in his medium-term budget policy statement on Oct 30. The government is also scheduled to detail a turnaround plan for loss-making state power utility Eskom by month-end.
- Higher export volumes, an improvement in new-vehicle sales and a stronger exchange rate relative to major trading and investment currencies contributed to the recovery.
- The month-on-month recovery is similar to that of January last year, when President Cyril Ramaphosa won the leadership of the ruling African National Congress. Sentiment jumped to a two-year high after his victory, but slumped as reforms stalled.
