Business confidence rises in Nov as BCI moves away from ‘desperate’ levels
Business confidence improved during November, with the South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) having gained two index points to 90.8.
Sacci stated that, while the despairing mood in the business environment seemed to be losing its grip, with the BCI appearing to move away from the “desperate” levels recorded over the previous six months – particularly the low 87.9 recorded in July – challenges such as further power shortages could trigger another bout of poor confidence.
“A slowdown in the economies of major trading partners, as well as low US dollar commodity prices could also affect the business climate negatively,” it warned.
The chamber added that the improvement in the November BCI was indicative that even the possibility of an improved approach to the challenges facing the economy could trigger a positive response in business confidence, with the urgency to change the course of the economy having been well established.
However, Sacci expressed concern that lacklustre economic performance and populist approaches to dealing with fundamental shortcomings in the domestic economy were undermining the performance of South Africa’s financial system.
“Moody’s recent downgrade of government’s debt, as well as major banks due to poor growth prospects and the possibility of government debt rising in relation to gross domestic product, are a case in point,” Sacci said.
The chamber stated that, while the month-on-month changes in the subindices of the BCI improved for the second consecutive month, these short-term changes would have to continue into the first couple of months of 2015 for a meaningful recovery to occur.
“With three of the six financial subindices being positive in November compared with only one in October, financial conditions could support looming improvements in the business confidence over the short term; [however], for a sustained recovery in business confidence, there must be solid and consistent improvements in the business climate,” Sacci said.
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