Business confidence in 2019 was the worst since sanctions hit South Africa in 1985 | Fin24
 
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Business confidence in 2019 was the worst since sanctions hit South Africa in 1985

Jan 09 2020 13:23
Carin Smith

(iStock)

While there was a slight improvement in business confidence in December last year, the overall level for 2019 was the worst since 1985.

The latest Business Confidence Index (BCI), released on Thursday by the SA Chamber of Commerce and Industry (Sacci) for December, came in at 93.1 compared to 92.7 in November 2019, and 2.1 index points below the level of 95.2 in December 2018.

The Sacci BCI reflects how businesses are reacting to and how they are experiencing the business environment.

The annual level of the BCI for 2019 is the lowest since 1985, when South Africa was feeling the impact of economic sanctions, Sacci economist Richard Downing told Fin24.

Business confidence has been on a steady decline over the past decade:

sacci 

Downing says this relates to the lack of certainty being felt in the business sector.

"The business climate is very much dependent on how the economy is performing and policy certainty is also very important. The domestic economy is not really finding its direction. The business sector wants to see action taken to solve SA's challenges," he says.

He notes that, at the same time, the international economy is not really "shooting the lights out", so SA cannot really depend on commodity prices. 

Growing gap

The latest index shows that the largest monthly positive impacts on the BCI came from merchandise import volumes. For Downing this points to a gap between demand, and the domestic economy's ability to supply.

"The gap seems to be growing. On the one hand government tries to stimulate domestic demand, but then, whether due to Eskom load shedding or other factors, the local market cannot supply in that demand. This will then also impact the country's balance of payments," says Downing.

According to the index report, factors impacting the business mood in December - some in a positive and some in a negative way - included the rand exchange rate against major trading currencies, US-dollar precious metal prices, the JSE all-share price index, and the US-dollar crude oil price.

sacci business

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