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Business confidence at its worst this year, marred by uncertainty

Sep 12 2018 12:03
Fin24

Business confidence in South Africa has declined by 4.2 index points - measuring 90.5 in August compared to 94.7 in July 2018 - the lowest level this year.

The South African Chamber of Commerce and Industry released its Business Confidence Index on Wednesday. The BCI does not reflect business sentiment, but rather how businesses are experiencing the present business environment.

In a statement, SACCI said, "Only three of the 13 sub-indices of the composite BCI improved in August 2018 on the July 2018 readings, five were unchanged and five turned negative. In comparison, 6 sub-indices improved month-on-month in July 2018 and three were unchanged.

SACCI said among the things that impacted negatively on the business environment were merchandise export volumes, a weaker rand exchange rate and higher inflation.

"It is of concern that the South African economy, since about 2008, has been disconnecting from the average world economic performance and even that of Sub-Sahara Africa," the statement read.

"The positive mood that prevailed at the beginning of 2018 has been overtaken by uncertainty and events that weigh on the economic prospects for South Africa. This also taints South Africa as a sought-after investment destination." 

South Africa has also since entered its first technical recession since 2009.

"The next big test for the business climate and the rand may be the mid-term budget review scheduled for October 2018. The Finance Minister will have to convince investors that the government can maintain spending discipline in the run-up to the 2019 elections and enhance economic growth. It has become imperative to establish economic performance beyond political popularity if the business and investor climate are to be restored and improved," the Chamber said.

SACCI buiness confidence index

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