Despite a minor uptick in business confidence in February, sentiment among firms hovered at depressed levels as SA economy continues to struggle to grow.

Sentiment among business as measured by the SA Chamber of Commerce and Industry (Sacci) business confidence index (BCI) rose marginally in February to 92.7. The monthly reading, however, hovers just 0.1 index points above the average for 2019, which was the BCI’s lowest annual level since the survey began more than three decades ago.

On an annual basis, the BCI was down from 93.4 in February 2019, driven predominantly by lower merchandise import volumes, the depreciation of the rand, and manufacturing output.

According to Sacci, businesses are “battling the odds of a tight financial environment and subdued economy”, it said in a statement

Business confidence has languished close to record lows as SA’s economy has struggled, with Stats SA confirming earlier this week that the country slipped into a recession in the last quarter of 2019. On an annual basis, the economy only managed to eke out growth of 0.2% — its lowest level since the global financial crisis.

Globally, the outbreak of the coronavirus, which has its epicentre in China, has sparked concerns over slower world growth and prompted the US Federal Reserve to cut interest rates to ameliorate the effects of the virus.

“The exogenous effect of the coronavirus had a notable effect on global financial and commodity markets,” Sacci said. “Although the effect spilled over to the real economy in terms of global trade and output in certain countries, the monthly BCI data did not reflect major effects in SA.

“However, like in January, the rand, share prices, and international commodity prices such as that of crude oil and precious metals, varied significantly.”

February’s BCI came in the same month as both the state of the nation address and the national budget.

Though finance minister Tito Mboweni announced plans to save R160bn on the state’s wage bill alongside R101bn in cuts to department’s baseline budgets, the state’s deficit levels remain elevated at 6.8% of GDP. The state’s debt levels are also not expected to stabilise  — rising to 71.6% of GDP.

Said Sacci, “It has become imperative that declining and low levels of business confidence and a non-inspiring environment for fixed investment and slow economic growth call for bold and decisive economic policy decisions.” 


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