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BUSINESS and consumer confidence continue to plummet, according to two surveys released yesterday.
Grant Thornton research showed that optimism levels among businesses in the first quarter plunged by 30% since 2013, to record lows.
The FNB/BER consumer confidence (CCI) survey for the first quarter showed consumer sentiment fell notably in the first quarter.
Having recovered from a decade low of -8 index points in the third quarter 2013, to zero in the final quarter of 2014, the index slumped to -4 index points in the first quarter of this year.
“The latest index number is now once again well below the long-term (since 1994) average of +5 for the CCI,” FNB said in a statement.
In Grant Thornton’s research, when executives were asked how optimistic they were about the economic outlook over 12 months, only nine percent reported total optimism, compared with the 39% recorded by South African businesses in 2013.
Grant Thornton’s International Business Report (IBR) provides insights from around the world on a quarterly basis. It also highlights regional and national perceptions of privately held businesses.
“We seem to be in a post-election lull as increased bureaucracy and economic uncertainty fuel the fires of pessimism,” said Andrew Hannington, CEO of Grant Thornton Johannesburg.
In contrast, global data from IBR revealed positive business expectations overall as the Eurozone jumped from one percent in 2013 to 20% in the first quarter.
“Many of the economies hardest hit by the financial crisis, such as Ireland and Spain, are increasingly optimistic about their growth prospects although our local picture is downtrodden, with business prospects falling to an all-time low,” said Hannington.
The data highlighted factors that were constraining business growth:
• A “massive 55% of South African businesses” lamented rising energy costs;
• 42% were frustrated by exchange rate fluctuations;
• 39% worried about economic uncertainty;
• 37% struggled to find a skilled workforce; and
• 36% said over-regulation and red tape were restricting expansion.
When business owners were asked if, in the last 12 months they, their staff or family had been affected by a threat to personal security — 65% said yes.
“South Africa’s terrible crime statistics are a major inhibitor to foreign investment, never mind local economic stability and business satisfaction,” he said.
Sizwe Nxedlana, chief economist of FNB, said: “With the escalation of load-shedding, consumers have understandably become more negative about South Africa’s economic prospects.
“Apart from the intensification of the power-supply crisis over the last five months, factors such as the tax increases announced in the February National Budget, an increased level of social and political turmoil and a further depreciation in the rand exchange rate against the U.S. dollar may also have weighed on consumers’ rating of the outlook for the domestic economy,” he said
