The South African Chamber of Commerce and Industry (Sacci)’s Business Confidence Index (BCI), which is a composite index of economic and financial market indicators rated by business as critical indicators of the business climate, has decreased by 12.1 index points month-on-month in April.

This is the lowest level since its inception in 1985 and the second sharpest month-on-month decline in the index's history.

On a year-on-year basis, the BCI declined by 15.9 points.

High volatility was prevalent in global financial markets in April and was also mirrored in South African financial markets. The rand exchange rate, share prices, and commodity prices  – notably the crude oil price, continued to reflect global and local uncertainty and unpredictability.

The further easing of the monetary stance in South Africa and the leniency of commercial banks provided some relief to business and households as the impact of the lockdown took effect.

The banking sector’s efforts were evidenced by the positive impact on the financial sub-indices of the BCI, Sacci says.

Seven of the thirteen subindices weighed negative on the BCI compared with March, but despite the present unpredictability and uncertainty in the business environment, six subindices were still contributing positively to the business climate.

Four of the six financial subindices positively influenced the business climate, while real economic activity was more harshly affected, with five of the seven economic activity subindices being negative.

Negative month-on-month impacts on the BCI were caused by the lower volume of merchandise exports, the weaker exchange rate of the rand against the major trading currencies and fewer new-vehicles sold – mainly owing to the lockdown, but also as a result of the downgrades by ratings agencies and a subdued economic performance.

The marked year-on-year decline was particularly exerted by the weaker rand, depressed new-vehicle sales, lower merchandise import volumes and much weaker share prices on the JSE.

Financial conditions were somewhat easier in April, mainly the result of lower inflation and lower real financial cost.

“It remains imperative that the economic performance recovers rapidly after the effects of the lockdown have eased. This could provide an opportunity to build a cohesive and more equitable society.

"The essentials of increased capital formation and the restoration of a business climate conducive to private sector participation and investor confidence over the longer-term remain preconditions for an economy in difficulty,” Sacci emphasises.