Stronger rand boosts busi­ness con­fi­dence

The Star Early Edition - - BUSINESS REPORT -

DATA re­leased yes­ter­day from the South African Cham­ber of Com­merce and In­dus­try’s (Sacci) Busi­ness Con­fi­dence In­dex (BCI) showed that South Africa’s busi­ness con­fi­dence ben­e­fited from a stronger rand last month after the BCI inched up by 1.7 in­dex points to 94.9 points in June from 93.2 points in May. Sacci said the ma­jor con­trib­u­tor to the up-tick in the in­dex in the pe­riod was due to higher mer­chan­dise im­port and ex­port vol­umes, the im­proved rand ex­change rate weighted against the US dol­lar, Bri­tish pound and the euro, and in­creased new ve­hi­cle sales. Richard Down­ing, an econ­o­mist at Sacci, said at present the in­dex was in­formed by de­lib­er­a­tions on eco­nomic pol­icy that could ad­versely af­fect in­vestor and busi­ness con­fi­dence. “The SA econ­omy is in the down­ward phase of the busi­ness cy­cle since De­cem­ber 2013 (43 months) – the long­est down­ward phase since the March 1989 to May 1993 phase of 51 months,” Down­ing said. Re­spon­si­ble dis­cus­sions on the eco­nomic way for­ward would have to take place be­fore un­in­tended con­se­quences of eco­nomic re­gres­sion; un­em­ploy­ment and in­creased poverty are set in mo­tion that could lead the econ­omy into a long-term struc­tural trap. “Work­ing a coun­try’s way out of a down­ward phase of the busi­ness cy­cle un­der nor­mal eco­nomic cir­cum­stances can be achieved by anti-cycli­cal pol­icy op­tions that are well known in suc­cess­ful coun­tries. How­ever, to find a way out of a re­ces­sion (more com­plex) given a less for­tu­nate credit rat­ing makes it a mat­ter of ur­gency.” – Ka­belo Khu­malo

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