The South African Chamber of Commerce and Industry (Sacci) business confidence index (BCI), which dropped to 70.1 in May, has since recovered to 81.4 in June and to 82.8 in July.
However, the BCI for July was still 9.2 index points below the level in July 2019 of 92.
The turnaround of the Sacci BCI that started in June continued in July but the momentum slowed.
On a month-on-month basis the most negative effects on the subindices of the BCI were caused by lower manufacturing output, lower merchandise import volumes, fewer new-vehicles sold, lower real retail sales and disrupted construction activity.
Lower inflation and increased precious metals prices, together with a lower dollar crude oil price, were notable, although the rand continued its volatility and trend to trade lower, notes Sacci.
Compared with July 2019, the year-on-year impact of all the real economic subindices of the BCI was negative, while the financial subindices had a mixed impact on business confidence.
Less merchandise import volumes – reflecting the depressed domestic economy, lower manufacturing output and the weaker rand – were notable and had the worse negative impacts on business confidence compared with a year ago.
"It appears that the global economy has moved beyond the economic trough that resulted from measures to curb the spread of Covid-19 and prepare countries to flatten the curve of infections," says Sacci.
The economic lockdown processes, however, had a substantial real impact on the global economy. Certain sectors were especially hard-hit and the pandemic affected countries differently, it notes.
Owing to globalisation linkages and interaction, there was little room for countries to escape these impacts. The lockdown also highlighted the economic vulnerabilities of economies and their structural deficiencies.
“South Africa has retained a strict and long-running Covid-19 mitigation. Some measures have had a devastating effect on business, households and government revenue and expenditure, while the experience and success of the government's emergency relief measures might have had mixed results.
"It was essential for South Africa to manage and balance the punitive effects of the lockdown process on business and the economy, with the need to contain the public health effects of the Covid-19 pandemic.
"Getting this balance right should have meant that while the economy was in lockdown, the intended public health benefits of containing the pandemic should have been visible. The exponential rise in Covid-19 positive cases has catapulted South Africa to be in the top five countries in the world and we have the highest number of positive cases in Africa.
"This may well mean that while the imposed lockdown has had a devastating effect on the economy and livelihoods, the benefit to the public healthcare is not as clear, given the exponential rise in positive cases, hospital admissions and mortality numbers in this period,” Sacci states.
Meanwhile, Sacci also expresses its concern about the allegations of corruption on the procurement and the apparent irregular awarding of contracts for the supply of personal protective equipment needed to prevent the spread of Covid-19.
"This is damaging South Africa’s recovery effort and brings into question the new administration’s intent to stamp out corruption,” Sacci notes.
It indicates its uncertainty on whether another Cabinet committee is a solution.
“Perhaps the time has come for government to pause, reassess and re-evaluate its own Cabinet resource capabilities, by enquiring whether some of its Cabinet committees have the required level of competence, grit and experience to handle the big tasks,” Sacci says.