Business confidence hits lowest in at least 20 years
The BCI has not been this low since the 1998-1999 emerging-market debt crisis
Two business confidence indicators have dropped to their lowest levels in 20 and 34 years, respectively, as more business people have become pessimistic about the future of SA's economy.
Rand Merchant Bank and Stellenbosch University’s Bureau for Economic Research's business confidence index (BCI) dropped to 21 index points in the third quarter from 28 in the previous quarter, data showed on Wednesday.
This is the lowest level since the 1998-1999 emerging-market debt crisis.
The expectation was for BCI to remain unchanged at 28 points, according to six economists polled by Bloomberg. The latest figure reflects that eight out of every 10 business people are discontent with the current conditions.
Four out of the five sectors that make up the BCI deteriorated in the third quarter, with retail and wholesale traders recording the biggest declines. Retail confidence dropped to 17 points from 28 in the previous quarter.
The SA Chamber of Commerce and Industry (Sacci) BCI fell to 89.1 index points in August from 92 in July, its lowest level since April 1985, when the UN Security Council called on members to introduce more far-reaching economic measures against SA during apartheid.
Seven of the 13 sub-indices that make up the Sacci BCI fell in August, four improved while two were unchanged from the previous month. The month-on-month decline was attributed to a decrease in merchandise export volumes, a weaker rand exchange rate and declining all-share prices on the JSE.
Cyril Ramaphosa's election to the presidency in early 2018 had resulted in a boost in business confidence amid promises of growth-enhancing reforms and commitments to fix ailing state-owned enterprises. This sentiment has, however, waned amid concerns that division within the ANC is delaying reform efforts.
“To further delay growth-boosting reforms that should have been implemented years ago — such as easing of immigration regulations, cutting red tape, auctioning spectrum and simplifying visa regulations — will simply perpetuate this vicious cycle SA is currently in,” RMB chief economist Ettienne le Roux said.
“Time is not on our side, especially now that the global headwinds the country is facing are becoming ever-fiercer,” Le Roux said.