Business confidence firms

5 August 2009

Business confidence inched up slightly in June, the South African Chamber of Commerce and Industry (SACCI) reports, with contributing factors including higher export volumes and lower inflation.

South Africa’s Business Confidence Index (BCI) increased to 83.2 points in July from 83.1 points in June.

The chamber said this week that although July’s BCI was 4.4 points higher than the 78.9 points registered in March, its was still “flirting” with lows last seen in the first half of 2003.

“Business confidence remains sensitive, and each month there are areas in the business environment which show vulnerability to the prevailing economic conditions.”

Disruptions to business

The chamber said that despite the current economic dispensation, disruptions to business caused by strikes and service delivery protests contributed to a tense, volatile business environment.

“Such activity will further dampen business and investor confidence, and would undermine growth prospects and job opportunities at a vulnerable stage in the business cycle.”

The organisation said that, given the increase in the number of unemployed people and the depth of the recession, there were growing irreconcilable demands on the economy.

“SACCI is of the opinion that the economy may be at a tipping point, and will be adversely impacted if not appropriately managed and if restraint is not exercised in respect of the aforementioned demands.”

Signs of resilience

The chamber added, however, that South Africa had shown signs of resilience to the economic downturn, with improvements in the rand exchange rate, consumer inflation and producer deflation that would provide the basis for an economic recovery.

“Until there are indications that the depth of the challenges encountered in the business environment is appreciated, and that such appreciation is reflected in the behaviour of all economic stakeholders, the BCI is likely to remain tentative,” it said.

Source: BuaNews