The composite South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) has stabilised at about 107 points since April, but remains subdued, the business chamber reports.
It points out that the BCI increased between May and June, but decreased by 1.5 index points to 107.3 in July.
However, the average BCI during the first seven months of this year was still 0.7 index points higher than the corresponding period in 2022. Despite being at lower levels, the BCI showed signs of stabilisation, Sacci says.
It states that business confidence in South Africa is being influenced by various economic factors.
"The International Monetary Fund's (IMF's) updated outlook indicates a decline in global economic growth from 3.5% in 2022 to 3% in 2023 and 2024. South Africa's growth is expected to be modest, with a slight positive growth in 2023 and a projected growth of around 1.5% in 2024, as per the IMF.
"The South African Reserve Bank's (SARB) forecast aligns with this, estimating growth at 0.4% in 2023, 1% in 2024 and 1.7% in 2025," it points out.
South Africa's headline inflation fell below the SARB's upper target range of 6%, prompting the central bank to maintain the repo rate at its recent Monetary Policy Committee meeting. Producer inflation also decreased to 4.8%, and intermediary output prices rose by only 2.4% year-on-year, indicating a potential easing of the inflationary process.
"As a result, a modest interest rate policy may persist," Sacci says.
It states that the BCI has remained stagnant over the past four months, "suggesting an unencouraging business climate for economic activity".
"This environment hinders improved longer-term prospects for the economy, resulting in limited fixed investment and inadequate conditions for robust economic growth and job creation.
"Additionally, the global economic environment is not currently favourable for South Africa as an open economy and investment destination, making it challenging to attract much-needed foreign capital and investment." it adds.