Busi­ness con­fi­dence slips in De­cem­ber

Business Day - - FRONT PAGE - Su­nita Menon Eco­nom­ics Writer [email protected]­nesslive.co.za

Busi­ness con­fi­dence in SA fell slightly in De­cem­ber 2018, in­di­cat­ing that there has been lit­tle progress in eco­nomic per­for­mance, a sur­vey from the SA Cham­ber of Com­merce and In­dus­try shows.

Busi­ness con­fi­dence in SA fell slightly in De­cem­ber, in­di­cat­ing that there has been lit­tle progress in eco­nomic per­for­mance, a sur­vey from the SA Cham­ber of Com­merce and In­dus­try (Sacci) shows.

The Sacci busi­ness con­fi­dence in­dex (BCI) fell 0.9 points to 95.2 in De­cem­ber from 96.1 in Novem­ber 2018. The in­dex was driven down by lower mer­chan­dise ex­port vol­umes, fewer new-ve­hi­cle sales, the de­creased real value of build­ing plans passed and the weaker rand ex­change rate. Com­pared to a year be­fore, the BCI was 1.2 points down.

“In com­par­ing De­cem­ber 2018 to De­cem­ber 2017, the task of restor­ing the busi­ness and in­vestor cli­mate re­mains a ma­jor chal­lenge,” Sacci said.

Busi­ness con­fi­dence surged at the start of 2018 with Pres­i­dent Cyril Ramaphosa’s ap­point­ment be­fore fall­ing to “a mod­er­ate level” for the rest of the year.

“After the elec­tion of new lead­er­ship to the govern­ing party in De­cem­ber 2017, the busi­ness cli­mate im­proved sub­stan­tially on pos­i­tive sen­ti­ment and ex­pec­ta­tions for the econ­omy,” said Sacci.

“How­ever, it be­came ap­par­ent that it will take longer to put the econ­omy back on an up­ward tra­jec­tory due to struc­tural and pro­longed ero­sion of ad­min­is­tra­tive ca­pac­ity and com­pe­tence to the econ­omy in­flicted ear­lier,” it said.

For the year, the in­dex av­er­aged 95.5 com­pared to 94.4 in 2017, sug­gest­ing it “could con­tinue the slow turn­around”.

“The gen­eral as­sess­ment is that the present-day ad­min­is­tra­tion ac­knowl­edges the huge chal­lenges ahead and the role a sound econ­omy could play in ad­dress­ing it,” said Sacci.

It warned that SA had dipped be­low many of the longer-term trends of eco­nomic ac­tiv­ity and fi­nan­cial mar­kets in 2018.

“Though ex­oge­nous fac­tors such as the global eco­nomic per­for­mance were rel­a­tively pos­i­tive for an open econ­omy such as SA, the coun­try lagged be­hind bet­ter-per­form­ing peer emerg­ing mar­kets,” it said.

This comes in the same week the World Bank’s eco­nomic out­look showed SA will be one of the worst per­form­ers in sub-Sa­ha­ran Africa in 2019.

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