Business confidence inches up

Thursday, May 7, 2009

Johannesburg - A slight recovery in South African business confidence could mark the start of a turnaround that could pick up momentum towards year-end as the global economy recovers, says the SA Chamber of Commerce and Industry (SACCI).

The SACCI Business Confidence Index (BCI) improved to 81.9 in April from a depressed 78.9 in March, reports

South African businesses remained under strain, and although there were fewer liquidations in March than in February, liquidations were 63 percent higher in the first quarter of 2009 than in the first quarter of 2008, the chamber said.

Negative month-on-month trends were also recorded for the sub-indices on consumer inflation, the number of new vehicles sold, real retail sales, and real credit to the private sector.

The improvements on the rand exchange rate, the JSE, import volumes and export volumes confirmed less frailty in business confidence, but not a turnaround.

"Economic growth for South Africa is revised downward into negative territory as recessionary conditions are taking hold, prompted by the contraction in the economies of South Africa's major trading partners in Europe and the USA and slower growth in South East Asia," the chamber said in a statement this week.

The chamber added that it expects the lower but still positive growth in Asia to counter the magnitude and duration of the contraction in South Africa to some extent, and sustain reasonable commodity prices as well as commodity exports from South Africa.

The current recessions in the affected economies were already more relentless and longer than their previous recessionary experiences, the chamber said, adding that the global inflationary outlook had turned away from a deflationary environment to modest inflationary expectations.

World trade is expected to decline by 11 percent in 2009, the chamber said, but remain stable in 2010 with notably fewer imports by advanced economies in 2009.

"The major challenge for businesses is to anticipate, identify and prepare for the turnaround of the present economic slowdown.

"There are signs that a measure of optimism in global financial markets has emerged and that the worst is behind the global economy," the SACCI said.