Pretoria- The Business Confidence Index (BCI) continued its upward trend registering 84.2 points in April - up from the 83.2 points registered in March, the South African Chamber of Commerce and Industry (SACCI) said on Wednesday.
The April 2010 figure is 2.8 points higher than in April 2009 and represents the second year-on-year increase in 30 months.
According to SACCI, between April and March this year, nine BCI sub-indices had a positive effect on the BCI as it did between March and February. The index has been on an upward trajectory since the beginning of 2010.
"Domestically, there is growing support for the view that most economic indicators have advanced beyond their lower turning points. The key economic constraint remains low levels of real household consumption expenditure which restrains stronger business activity," said SACCI.
It added that though the 2010 readings of the BCI were relatively subdued, the positive trend is expected to gain momentum due to export led demand and improving global economic circumstances.
"However, the public debt problems of Greece, does present the risk of contagion if not addressed decisively. Public debt management concerns in the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) have the potential to put the Euro Zone at risk and affect the global economy on a more intensive scale," it said.
Apart from Greece (which is in a debt crisis) other PIIGS countries are also under constant scrutiny for possible public financial default.
"Although Greece is regarded as an advanced economy, global market participants will also critically view the fiscal and public finance policies of emerging markets. Demand for financing for public sector programs in South Africa will be evaluated against the background of recent developments in Greece and the other PIIGS countries," said SACCI.
The chamber added that events in Greece have once again made the world aware of the fragility of the recovery and that policy makers must tread cautiously if the sustainability of the recovery is to be assured.
