The Merchantec CEO Confidence Index suffered a setback in the fourth quarter following its gradual recovery in the second and third quarters of this year, declining 2.1% to 47.9 points – below the neutral 50-point level.
Surveyed CEOs indicated that recent rand gains, after the National Prosecuting Authority dropped fraud charges against Finance Minister Pravin Gordhan and the fact that ratings agencies have maintained the country’s credit rating at investment grade, are likely to be short-lived.
The CEO Confidence Index, which is a forward-looking indicator, has closely tracked the rand since 2009 and, as concerns still cloud the domestic economy, the rand may depreciate even further in 2017.
Factors such as political uncertainty, government infighting, the former Public Propertor’s ‘State of the Capture’ report, growing unemployment rates, government’s nuclear energy plans and broad-based black economic-empowerment policies all remain a concern for CEOs.
The index points out that overall depreciation is supported by a decrease in confidence across all six industry sectors measured, as CEOs believe that current economic conditions in South Africa, compared to six months ago, are deteriorating, as indicated by a confidence decrease of 2.3%.