Business Confidence Remains Tentative
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The SACCI Business Confidence Index declined slightly by 0.3 from 91.4 in September to 91.1 in October 2013. It is only the second time in the last six months that the BCI was above the level of 91 index points. The October 2013 BCI was 0.9 index points below the level of October 2012 and 8.9 index points below the 100 for the 2010 base year.
Six sub-indices of the BCI failed to change meaningfully between September and October 2013 thus reflecting a tentative business mood. On a year-on-year basis, six sub-indices made positive contributions to the BCI and seven had a negative impact with major activities like manufacturing output, retail sales and new vehicle sales contributing to the downward pressures on the BCI in October 2013. SACCI is concerned that the ongoing labour disputes and disruptions of business, as well as the risks to South Africa’s sovereign ratings, are a continual weight on an already tentative business climate. Lingering economic challenges in some of the larger economies of the world also contributed to the tentative business climate resulting in low business and investor confidence.
SACCI hopes that the resilience lead by the Johannesburg Securities Exchange, where the all-share price index set new record levels in October 2013, would support improved confidence on a broader economic front. The prospects for world economic growth is set to improve by 0.7 percentage point to 3.6% in 2014 while in February 2014 the US may find a longer-term solution to its fiscal challenges thereby facilitating greater stability in the world’s largest economy.
It is imperative that the strengths of the MTBPS are supported by broader government policy to promote business and investor confidence. The promotion of the National Development Plan as a comprehensive framework for accelerated economic growth is also key to turning the tide on the tentative business climate in South Africa.
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