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Tentative, but improved business climate - index

Mar 09 2018 07:34

Cape Town - The latest Business Confidence Index (BCI) of the South African Chamber of Commerce and Industry (Sacci) released this week shows what it calls a tentative, but improved business climate.

The BCI upheld the improvement of business confidence, but pulled back by 0.8 to 98.9 index points in February 2017. This was after recording a relative high level of 99.7 index points in January 2018.

The BCI for February 2018 is 3.4 index points higher than a year ago and kept to levels above 95 since November 2017.

"The direction of various business climate indicators is still positive although the pace of improvement has slowed from the exceptional positive mood in December 2017 and January 2018," Sacci said in a statement.

"Although the present business confidence contains substantial positive sentiment, investment decisions will soon have to become a reality to create sustainable higher economic growth and employment prospects."

Sub-indices
 
Six of the thirteen sub-indices that comprise the Sacci BCI, had a negative monthly impact in February 2018 – declining from exceptional improved levels in January 2018.

The annual improvement of the BCI in February 2018 was the result of ten of thirteen sub-indices that improved and two that were unchanged on a year ago.

The largest annual positive contributions to the business climate were from lower inflation, increased merchandise import volumes, improved new vehicle sales and increased manufacturing output, according to Sacci.

The high real cost of financing and less merchandise export volumes had a negative annual effect on the BCI.

"During the World Economic Forum meeting in Davos in January 2018, President Cyril Ramaphosa (then deputy president), promoted South Africa as an investment destination, assuring investors of a secure and stable investment environment," said Sacci.

"Many of the policy proposals should thus be targeting concerns of international credit ratings agencies as well as those for potential local and international investors."

In the chamber's view, the Budget 2018 was an effort to manage a desperate situation, a resolve to turn the economy away from the fiscal cliff and prevent a worse outcome that was structurally pending as well as a possible downgrade to below investment status.

"The lower inflation and the stronger rand exchange rate, together with a budget indicating government’s resolve to turn back from the fiscal cliff, could accommodate an easier monetary policy stance that should further enhance the economic performance over the medium-term," said Sacci.

"Greater economic policy consistency and predictability should add to the present improved business confidence level."

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sacci  |  business confidence  |  sa economy
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