Business Confidence Remains Rigid
The SACCI BCI (2015 = 100) remained sensitive to the instability in the business climate, both domestically and internationally. After declining by 0.7 index points in October 2019, the BCI appears to crept upward in November 2019. The index improved by 1.0 index points on October to reach 92.7 in November 2019. The index was, however, still 3.4 points below the level of November last year.
The upward movement in November was specifically driven by the foreign trade performance as merchandise trade volumes of exports and imports were notably better than the previous month. Five sub-indices improved on the October readings, four declined, and four remained stable. Three of the seven economic activity sub-indices (see box on page 4) contributed positively to the BCI, while two of the six financial sub-indices made positive impacts on the BCI in November 2019.
The annual decline of 3.4 index points in the BCI between November 2019 and November 2018 is marginally better than the 4.1 annual decline of October 2019. The US-dollar price of precious metals was the only noteworthy sub-index that pushed the BCI higher in November 2019 compared to a year ago
The IMF Article IV statement released after the regular IMF staff visit, mentions the already known problems of state-owned enterprises, fiscal deficits and low economic growth. The IMF proposes that obstructions to growth be removed, weaknesses attended to and to rebuild policy manoeuvrability – notably in the public sector and fiscal policy in general. The ultimate goal should be to expedite structural reform that could continuously enhance private investment and participation.
The latest South African Airways (SAA) labour challenges provide the impetus for government to address the state-owned enterprise issue in a pragmatic way. Notably to separate the political shareholder of the business from the institution’s operations. Much of the malaise can be ascribed to political interference in the running and function of these enterprises to the detriment of the institutions themselves and indeed the negative impact this has had on the South African economy.
The difficulty in decision making aimed at the inevitable structural adjustments necessary to let the economy perform better are still lacking. The effect of indecisiveness and the time lapses to taking action are going to impact critically on the economy and therefore business and investor confidence as year-end approaches.
For more information, contact:
Alan Mukoki SACCI CEO 082 551 1159
Richard Downing SACCI Economist 082 822 5566
Business Confidence Index
If you don’t see the document below, please try refreshing your browser [F5]