Business outlook bleak unless there’s a change of tack

DISRUPTIONS in electricity supply, the volatile exchange rate, industrial action in the form of strikes as well as depressed commodity prices have all added to the less-than-positive business outlook in the second quarter of this year, according to the Manufacturing Circle.

This is as economists warned that in the short term it was imperative for the government to urgently address the lethal blend of policy inconsistencies, administrative and management failures that had complicated the crises.

In its report for the second quarter of the year, the Manufacturing Circle, which surveyed a total of 73 companies in various sectors, said employment was subdued.

There were only about 20 percent of companies reporting an increase in the number of employees in the second quarter of the year, a proportion very similar to that of the first quarter of last year.

The survey found that about 48 percent of firms surveyed indicated that they had decreased their number of employees in the second quarter of this year.

“The commodity price crunch is expected to linger for quite some time.

“This will put more and more pressure on mining companies, who are facing rising input costs and the ever-present threat of labour disruptions,” said Bart Stemmet, an economist at NKC African Economists.

Institute of Race Relations chief economist Ian Cruickshanks said the economic deterioration was likely to get far worse before it got better if the government did not change policy and leadership in the short term. – Banele Ginindza