Business confidence index remains above 95, despite m/m decline in April

9th May 2018

By: Marleny Arnoldi

Deputy Editor Online

     

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The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) declined by 1.6 index points month-on-month to 96 in April.

The index, which recorded a 1.1 index point year-on-year improvement in April, has, however, remained above 95 for six months.

Three of the thirteen subindices had a positive monthly impact in April, while five were unchanged and five had a negative month-on-month effect.

Increased merchandise import volumes, real retail sales and the real value of building plans passed, made the largest positive monthly contributions to the BCI.

Lower merchandise export volumes, lower new-vehicle sales and the weaker rand made the most noteworthy negative monthly contributions.

The largest positive year-on-year contributions to the business climate in April came from lower inflation, higher new-vehicle sales and the increased real value of building plans approved. Lower real merchandise exports and imports, and ongoing high real financing costs had the largest negative effects on the business climate, compared with a year earlier.

Sacci stated that South Africa’s leadership has a mammoth task to restore the economy to its full potential.

“The restoration process of the economy, starting by addressing maladministration and corruption, has been incisive and the market and economic indicators are reflecting those sensitivities,” said Sacci.

The restoration process has to address simultaneously the revival of economic growth and employment opportunities. Sacci believes it is important that a team has been selected to market South Africa as an investment destination.

“Domestic savings, at about 16% of gross domestic product, are not enough to finance such a daunting investment effort. It is, therefore, an imperative that capital from abroad should complement the domestic savings effort.”

Investor confidence holds the key to restoring the potential of the South African economy. The present positive business mood is still in the process of repositioning with business confidence reflecting patience and anticipation, states Sacci.

Greater certainty and higher fixed investment should provide the economy with a base for growth. However, political stability and law and order are essential ingredients and preconditions for economic advances.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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