SA's business confidence improves in July

Wednesday, August 8, 2018

South Africa’s business confidence rose in July, doing so for the first time in six months, the South African Chamber of Commerce and Industry (SACCI) said on Wednesday.

The body’s Business Confidence Index (BCI) gained one index point in July 2018 and was 94.7 compared to 93.7 in June 2018.

“Whereas the downward momentum of the BCI slowed in June 2018, the BCI made a marginal upward turnaround in July 2018,” said SACCI.

According to the index, the business climate benefited from sub-indices reflecting both real economic activity and the financial surroundings. Only two of the seven real-activity sub-indices had negative month-on-month influences, and two of the six financial sub-indices had negative month-on-month effects on the BCI in July 2018.

The biggest positive month-on-month influence on the BCI in July were merchandise export volumes, lower inflation and real retail sales.

Merchandise import volumes, the decline in precious metal US dollar prices and the number of new vehicle sold, made the largest negative month-on-month impact on the BCI in July.

The lower BCI in July 2018 compared to July 2017 was mainly the result of less merchandise import volumes; the weaker, weighted rand, and decreasing share prices on the Johannesburg Stock Exchange (JSE).

Three of the seven real-activity indices made negative year-on-year impacts on the BCI in July 2018, while four of the six financial sub-indices had negative year-on-year effects on the business climate.

Matters raised by the International Monetary Fund (IMF) in its Article IV report have already been noted by several role players in the economy.

“However, the execution of policy and removal of structural economic constraints require a longer-term approach. Addressing political uncertainty and the implementation of a suitable economic policy framework, however, should be a short-term priority,” said SACCI.

The IMF’s Article IV consultation with South Africa took place between 28 May and 11 June 2018.

In its reaction at the time, National Treasury said while government concurs with the IMF’s view on the need to implement reforms as set out in the National Development Plan (NDP), it remains committed to achieving inclusive growth that will create jobs.

On Wednesday, SACCI said that while there are still major challenges facing the South African economy, the country has turned a corner.

“Although there are still major economic challenges facing South Africa, it appears the downward trend in the business climate since February 2018, has lost its momentum and confidence could turn more positive. This mainly depends on the removal of economic policy uncertainties and the nurturing of all global economic relations for the benefit of South Africa and all its people.

“Apart from the economic challenges, it is important to have a stable socio-political environment that enhances economic performance and business confidence,” it said. -