Sentiment in the business sector in South Africa has remained relatively stable to the end of November, due to optimistic economic performance and in spite of the ongoing energy crisis and political instability.
The South African Chamber of Commerce and Industry (Sacci) yesterday said the Business Confidence Index (BCI) declined by 1.4 index points to 109.4 in October.
However, Sacci said the BCI recovered the 1.4 index points in November and went back to 110.9 points.
The BCI was 3.6 index points higher in November this year than in November last year, and 2.9 index points up on November, 2020.
Sacci said the erratic movement of the BCI in 2022 from a high of 112.0 in February to a low of 103.2 in May – a spread of 8.8 index points – in itself mirrored the risk and uncertainty surrounding the business climate in South Africa.
Sacci economist Richard Downing said that eight of the 14 sub-indices monitored had a positive or neural impact on the BCI between October and November.
Of these eight sub-indices, Downing said increased new vehicle sales, share prices on the JSE, and manufacturing output made the largest positive short-term (month-to-month) impact on the BCI in November.
Increased inbound tourism, increased new vehicle sales, and higher merchandise import volumes had a notable positive effect on the BCI on an annual basis, over the medium-term (year on year).
“The unexpected performance of business confidence during 2022 was affected by a combination of global and local economic developments,” Downing said.
“However, the present level of the Sacci BCI indicates that the disruptive effects experienced during and after Covid in 2020 and in 2021 has been largely overcome.”
BCI data showed that import and export volumes both experienced increased activity in the first nine months of 2022, increasing significantly by 15.9% and 9.6% year on year, respectively, with foreign trade activity thus playing an important role in support of business confidence.
South Africa’s real GDP grew by 2.3% y/y in the first three quarters of 2022. The tertiary sector increased by 4.1% y/y over this period; but the secondary sector declined by 0.9% y/y; and the primary sector dipped by 6.1% y/y.
Downing said it appeared that economic performance contributed to the relative stability of business confidence, adding that investor confidence should benefit from the latest economic performance.
“Despite energy supply and logistics challenges, the economy has watered through, though the performance was not broad based and mainly limited to the tertiary sector,” Downing said.
“International trade in goods and services provided an important backstop and assisted in maintaining a reasonable level of local economic activity and stability. It remains important to return greater economic stability and more certainty to South Africa.
“Political and social stability are also critical elements affecting investor confidence. South Africa cannot afford instability in a global environment of possible recessionary forces impacting keener investor choices,” he said.
BUSINESS REPORT