Pretoria - Business confidence was marginally down to 98.4 points in September, the South African Chamber of Commerce and Industry (SACCI) said.
In its monthly Business Confidence Index (BCI) released on Thursday, SACCI said the BCI was down to 98.4 in September from August's 98.6 and below the September 2010 level.
"The smaller month-on-month changes in August and September 2011 suggest that the strong decline in July 2011 was curtailed. Although the pace has slowed, the BCI continued its downward trend that began in the second quarter of 2011."
According to the index four of the seven sub-indices representing real economic activity remained positive but of the six sub-indices in the financial environment only one had a positive month-on-month impact on the BCI in September.
"On an annual basis, the real economic environment has weakened further in September 2011 with four of the seven sub-indices in negative territory. Although the financial environment, on balance, remains positive [four out of six sub-indices], all the sub-indices except for interest rates over the short-term remain vulnerable to developments in global financial markets," said the Chamber.
SACCI said a substantial downside risk to economic prospects for 2011 and 2012 in global markets remains.
"In the present economic conditions, inflation should remain low and may even lead to stagflation. Under the present circumstances, businesses will experience greater strain as they will not be able to pass on cost escalations. This scenario could easily lead to recessionary conditions in global markets with dire consequences for already beleaguered economies," it further explained.
It was also noted that global events were expected to have a greater impact on the South African economy in the months to come.
"Business confidence remains fragile under present conditions and must be supported by a rational, consistent policy approach."
