The Merchantec CEO Confidence Index recorded a decrease in CEO confidence to 38.1 points in the first quarter of this year, the lowest score recorded since the index’s inception in the second quarter of 2009 and the fifth consecutive quarter in which the confidence of CEOs has dropped.

Most notably, the financials sector suffered a 50% erosion from being the most confident in the comparative period of 2015 to the least confident this year, pointing to a potential financial services crisis.

Meanwhile, the index showed that 64% of CEOs believed South Africa was heading for a ratings downgrade, while 36% of CEOs were optimistic that the economy would stabilise.

The expectation of a potential ratings downgrade was mainly driven by a lack of trust in leadership, current fiscal policies, overregulation and low growth prospects. CEOs further indicated a common sentiment that the country’s political landscape was out of touch with business challenges and that the budget was too reliant on government cutting costs.

The possibility of further interest rate hikes also seemed likely.

Results indicated a 12.2% decrease in confidence in current economic conditions compared with six months ago, followed by a 10.4% decrease in confidence that companies would be able to raise capital or debt.

Particularly, the decrease of the latter was significantly led by a 43.6% confidence drop from the financials sector. On the contrary, the basic materials sector reported the largest increase in confidence in both planned level of Investment in their companies (87.5%) and current economic conditions compared with six months ago (59.4%).

South African CEOs saw the current economic conditions in the country and their ability to secure debt or equity capital as moderately worse compared with six months ago. On average, CEOs were expecting growth in their industry and company and planned levels of investment to decrease slightly.