Picture: ISTOCK
Picture: ISTOCK

A poll of CEOs found average confidence swung to a pessimistic 38.7% in the second quarter from a slightly optimistic 51.4% in the first quarter.

The quarterly Merchantec CEO confidence index found the majority of bosses surveyed were pessimistic about growth prospects in 2017 due to political instability, SA’s credit downgrades by all three major ratings agencies, ineffective empowerment policies along with tax increases.

The survey echoed a Rand Merchant Bank sponsored business confidence index released on June 14 done by Stellenbosch University’s Bureau of Economic Research, which found business confidence in the second quarter collapsed 11 points to 29, the lowest since 2009.

The Merchantec CEO survey found that confidence feel in all six segments into which it splits the economy, taking four that were previously optimistic to the pessimistic side of 50%.

The confidence of the CEOs of basic materials producers recorded the largest decrease, falling to 31.67% from 54.38%. The drop in overall confidence was driven by decreases in contributing individual components of the index: mainly a 53.2% decrease in planned levels of investment and a 52.6% decline in economic conditions.

Consumer goods CEOs’ confidence fell to 42.41% from 53.44%. Sentiment was primarily driven by a 31.2% decrease in confidence relating to economic conditions and a 23.8% decrease in the confidence relating to the ability to secure debt and equity capital, the report said.

The confidence of CEOs of financial services companies fell to 40.36% from 52.5%. This fall in can be attributed to a 42.9% decrease in confidence relating to economic conditions, and a 35.4% decrease in industry growth expectations.

"A number of CEO’s have adopted the wait-and-see approach and are in ‘survival mode’. They feel the IMF forecast of 1% growth is a bit bold considering the current economic climate. CEOs in the consumer goods sector have noted a marked decrease in consumer spending, while our basic resource sector seems to be the worst hit," Merchantec said.

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