The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) receded to 90.5 in January, from 91.9 in December, with five subindices turning positive, three remaining roughly unchanged and five remaining negative over the period.

The BCI was 3.5 index points below the January 2013 level, while the January 2014 reading was the lowest for the BCI since August 2013, comparing unfavourably with 100 recorded for the 2010 base year and the 100.7 recorded for the BCI at the trough of the current business cycle in September 2009.

“It concerns Sacci that, year-on-year, only two subindices made positive contributions to the BCI, ten had a negative impact and one was neutral.The year-on-year decline in business confidence bodes poorly for growth, employment and the capacity to address vulnerabilities in the economy,” the organisation said in a statement on Tuesday.

Meanwhile, exports continued to improve over the period, while municipal services made a minor contribution to the January BCI, with the latter coming off a low base.

Sacci urged policy makers to be prepared for the continued and significant tightening of global financing conditions, stating that, in response to subdued economic growth, South Africa should pay urgent attention to facilitating fixed investment.

“South Africa’s immediate vulnerabilities; the deficit on the current account, the quality of capital inflows that expose the rand to severe pressure and the size of the budget deficit, are risk elements that demand ongoing attention,” it noted.

Moreover, the country’s competitive position among other emerging markets was “not favourable”.

“It is clear that South Africa’s rand is regarded as quite vulnerable in relation to other emerging market currencies and it ranks at the lower end of its peer group. South Africa’s budget and current account deficits, as a percentage of gross domestic product (GDP), is the second highest at 11.3% – second only to Egypt at 16.2% of GDP.”

Despite the current weak economic performance, Sacci held that disciplined policy responses would bear positive results over the medium to long term.