SA business confidence plunges – Grant Thornton
SOUTH Africa’s problems, big and small have tallied up to undermine business optimism, which plummeted to a paltry 3 percent in September quarter on quarter from 35 percent, according to tracker research released by Grant Thornton South Africa yesterday.
The consultancy firm’s international business report says a lack of visible economic reforms, current issues relating to land grabs, the “Nkandlagate”, and continued rabblerousing in Parliament are not helping matters, and business executives’ optimism plummeted to 3 percent from 35 percent as of June 30.
“As long as we have these issues, the economy will not grow beyond 2 percent. They need to be addressed as a matter of urgency,” Deepak Nagar, the national chairman of Grant Thornton, said.
The data is from a survey of business executives about the coming 12 months as of September 30.
The international business report provides insight into the views and expectations of over 13 000 businesses a year across 45 economies.
The survey of South African business executives also highlights that a barrage of factors are constraining business growth, with 51 percent of businesses lamenting rising energy costs. Those frustrated by exchange rate fluctuations were 47 percent, while 37 percent struggled with a lack of a skilled workforce, 36 percent expressed concern regarding economic uncertainty and 35 percent stated over-regulation and red tape as restricting business expansion.
Nagar said the five-month strike in the platinum sector, the one-month strike in the metals sector and the industrial action at the SA Post Office continued to impact negatively on economic performance.
“It’s not all a lost cause. We need to get back on track. Growth is the driver of the economy. Otherwise our African counterparts will overtake us as an investment destination of foreign direct investment,” he said.
However, Nagar said South Africa was not the only one confronting business optimism issues. The research’s global figures show the economic balance in the euro zone is undergoing significant change as German business confidence took a sharp nosedive in the last quarter, threatening to drag the bloc downwards.
Global figures reveal in the last three months optimism across the euro zone fell from a net 35 percent to just 5 percent.
Business optimism in Germany plummeted from 79 percent to just 36 percent.
Nagar said this followed a contraction in the German economy in the second quarter, amid fears over the affects of the geopolitical Ukraine crisis on trade and energy supply.
He said a continued slide in optimism in France, the EU’s second-biggest economy, was also contributing to the euro zone’s malaise.
When South African business owners were asked if in the last 12 months they, their staff or family of staff had been affected by the threat of personal security such as house breaking, violent crime, road rage, the results were very disturbing, with a massive 65 percent saying yes.