SA Business confidence slightly increases

Positive contributors were, increased merchandise export volumes; increased new vehicle sales; and lower core inflation. 

Guillem Sartorio/Bloomberg. 

South Africa’s business climate, is not losing hope.  

Despite South Africa starting the decade negatively, business confidence in the country has slightly improved.

Statistics SA on Tuesday announced that South Africa was in recession for the last half of 2019.

This follows the Gross Domestic Product (GDP) falls for two consecutive quarters- the SA economy shrank by 0.8% in the third quarter followed by a contraction of 1.4% in the fourth quarter.  

According to SA Chamber of Commerce and Industry (Sacci)  South Africa’s beleaguered economy may have a silver lining, as Business Confidence Index (BCI) improved in February 2020. It increased by 0.5 index point to 92.7.

Source: SA Chamber of Commerce and Industry (Sacci).
Sacci said that these are positive news as annually the index was marginally down by 0.7 index point on February 2019.

“The slight rise of the BCI in February indicates that the business climate, although gloomy, is battling the odds of a tight financial environment and subdued economy,” Sacci said.

The markets have been volatile since January as the coronavirus, threatens economic growth to come to a halt.

SACCI said, “The exogenous effect of the coronavirus had a notable effect on financial and commodity markets. Although the effect spilt over to the real economy in terms of global trade and output in certain countries, the monthly BCI data did not reflect major effects”.

The chamber uses thirteen sub-indices to measure the level of business confidence levels in the country as indicated below.

Source: SA Chamber of Commerce and Industry (Sacci).
It says five of the thirteen sub-indices of the BCI deteriorated relative to their January 2020 readings, while five sub-indices remained unchanged, and three positively affected the BCI in February 2020.

“One of the six financial sub-indices impacted positively on the business climate in February, three were neutral and two negatively affected the business climate. Real activity was less negative in February as only three of the seven dragged the BCI down compared to five in January 2020” it added.

The negative monthly impact was mostly from less merchandise import volumes, real retail sales, and the weighted rand exchange rate.

On the other hand, increased merchandise export volumes, the increased number of new vehicle sales and lower core inflation were positive contributors the February 2020 BCI.

Looking at the business confidence levels for the past year, it has declined year-on-year by 0.7 index point because of less merchandise import volumes because of the depreciation of the weighted rand exchange rate and manufacturing output

It says higher merchandise export volumes, lower core inflation, and the US-dollar price of precious metals enhanced the business climate compared to February 2019.


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