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The South African Chamber of Commerce and Industry (Sacci) on Thursday expressed concern about the fact that its Business Confidence Index (BCI) for May had fallen below the 90-point level for the first time since April 2000.
The BCI fell 3.7% to 88.9 in May, which the chamber said was “a setback to an already weak upward trend since the start of 2014”.
Crucial subindices on physical economic activity – export and import volumes, manufacturing output and vehicle and retail sales – retracted on a year-on-year basis in May.
“Although a more balanced monetary environment prevailed in May, inflation, the rand depreciation, lower borrowing levels and low commodity prices remain threats to the BCI outlook,” Sacci noted in a statement.
The chamber believed that South Africa could deal with issues of low economic growth, fiscal difficulties, a persistent balance of payments challenge, and low domestic savings, given the appropriate policy response.
“What is of greater concern are the challenges that are more complex in determining policy responses, including concerns about property rights, unemployment, income disparities and rising levels of labour protest action.
“Initial statements and commitments by certain Ministers in the new Cabinet are reassuring and could be key to bolstering business confidence in the coming months. This, in partnership with the resilience of local business, could also mitigate recent concerns about a local recession,” Sacci stated.