Business sentiment will be in focus in the week ahead, with economists expecting the January outcome to remain muted amid waning optimism about the domestic economy.

The median forecast among  four economists polled by Bloomberg is for the SA Chamber of Commerce and Industry (Sacci) business confidence index (BCI) to have inched up 0.1% in January from 93.1 points in the previous month.

In an economy expected to grow less than 1% in 2020, based on the latest forecasts from the International Monetary Fund (IMF) and the World Bank, the most recent BCI prints have painted a gloomy picture of the perceptions of SA’s business climate. The index declined from an average of 95.5 points in 2018 to 92.6 in 2019.

Business confidence has been dampened by growing pessimism about SA’s economic growth prospects and the government’s ability to bring about structural reform. Investors are closely watching February’s budget statement for signs of the implementation of pro-growth policies and for the future of SA’s last remaining investment-grade credit rating by Moody’s Investors Service.

“Sensitivities with regard to the fiscal situation, the balance of payments, views expressed in the state of the nation address, the budget, and credit ratings, will have a decisive effect on the business climate and the economic performance of SA in 2020,” Sacci said in January.

After dropping in December to its lowest level in three months, the Absa manufacturing purchasing managers’ index (PMI), which gauges activity in the manufacturing sector, is likely to have risen to 47.3 index points in January from 47.1 previously, according to a Bloomberg forecast.

FNB economists said in a note on Friday that the January print for the Absa PMI is likely to be “dismal” as the local economy faces weak domestic demand and intermittent power outages which have affected production.

Investec economist Kamilla Kaplan said the PMI may rise to 48 points in January, “partly on a rebound effect from the electricity supply disruptions in December that affected production. Electricity load-shedding in the month of January was mainly concentrated in the first part of the month, before most of the industry reopened for business after the holidays. Despite the forecast lift in the PMI gauge it would remain in contractionary territory amid weak demand conditions.”

The manufacturing sector, which contributes about  14% to GDP, is threatened by the prospect of continued load-shedding, which is both disrupting production and threatening investor and business sentiment.

The National Association of Automobile Manufacturers SA is set to release new vehicle sales data for January this week. Kaplan said new vehicle sales are likely to have risen 4.5% year on year from 4.2% in December. “December traditionally sees lower sales volumes as purchases are typically postponed to January so new year registrations can be obtained.” 

The minister of mineral resources and energy Gwede Mantashe will open the 2020 African Mining Indaba in Cape Town on Monday. Mining Investors and African heads of state will tackle issues in the industry during the four day-conference.