Business confidence has continued to fall from the surge at the start of 2018, a survey from the SA Chamber of Commerce and Industry (Sacci) shows.

The Sacci business confidence index (BCI) remained steady in January, falling slightly to 95.1 compared to 95.2 in December 2018.

However, the BCI was 4.6 points down from the “exceptional” level of 99.7 in January 2018, when sentiment was lifted to a two-and-a-half-year high on expectations of better business prospects with the election of Cyril Ramaphosa as ANC president.

Sacci’s index is a measure of the volume of activity rather than a poll of sentiment, and has a relatively strong relationship with economic growth.

Following January 2018's surge, the index eased significantly throughout most of 2018 in the context of a recession in the first half of the year and sluggish economic conditions, while allegations of corruption weighed heavily on sentiment.

“The deterioration of the economic and business climate in the preceding years was, however, worse than realised and it soon became clear that it would call for more active engagement to get the economy and business climate back on track,” Sacci said.

For 2018 as a whole, business confidence averaged 95.5.

Nine of the 13 subindices of the Sacci BCI were worse off in January 2019 than in January 2018. Despite this, the index showed that the economy and the business climate were “better placed for improved performances”.

“Although the Sacci BCI appears to have stabilised, investor confidence remains the panacea to higher economic growth in 2019 and beyond,” said Sacci in a statement on Wednesday. 

“Dealing effectively with institutions and individuals involved with adverse business practices in the public domain becomes an important element for restoring confidence.” 

This comes ahead of the budget policy statement for 2019, with Sacci adding: “It is not only an exercise of selecting spending priorities, but budget 2019-2020 could be a key event for setting the economy on a renewed growth path to complement the Davos investment showcase.”

Capital Economics economist John Ashbourne said the economy looked set for a weak start to the year but that this was likely to change with the pick-up in confidence and an easing of inflation.

“The country’s upcoming election will probably boost confidence if — as we expect — a re-elected Ramaphosa announces new reforms.”

Sacci said recent efforts to convince business and investors would have to be followed by implementation, “thus demonstrating commitment to improve the economic performance of the affected entities and thus the broader economy”. 

Investec economist Kamilla Kaplan said Ramaphosa would emphasise the importance of collaboration between government, business and labour to foster an environment conducive to faster economic growth.