The SACCI Business Confidence Index (BCI) declined from 90.7 in July to 90.5 in August 2013. It is the fourth consecutive month that the BCI has remained in the order of 90 – varying in a narrow band between 90.2 and 90.7.
Current BCI levels are 10 points below the average of 100 for the base year of 2010. Some unpredictable short-term movements in economic activity impacted the BCI sub-indices and contributed to the lack of improvement in confidence.
On a month-on-month basis, the movements of the BCI sub-indices in August leaned largely to the negative with only three of the 13 sub-indices being positive, eight being negative and two being neutral between August and July 2013.
On a year-on-year basis, nine sub-indices made negative contributions to the BCI and four were positive. The improved levels of merchandise import and export volumes made notable positive contributions to business confidence while the financial sub-indices were less supportive as inflation and the rand exchange rate had a negative impact on the business mood.
Apart from the impact of labour protest activity, SACCI identified three further significant economic challenges confronting the South African business environment – slow economic growth, rising inflation and the exchange rate of the rand.
Many of the causes of poor economic performance could be ascribed to a domestic inability to address some critical issues relating to economic performance such as the impact of disruptive labour conduct.
SACCI is of the opinion that many of the concerns can be resolved by nurturing an investment and business climate that promotes private sector participation and responsibility. It is important that conditions supportive of economic growth are put in place urgently.
SACCI is concerned that the economy might be entering a phase of high inflation, continuing high unemployment and subdued economic growth. This could propel South Africa to an economic course that will be difficult to escape and which will be accompanied by unwanted monetary and real economic consequences.
The SACCI BCI is further contained at low levels by labour and policy challenges that are limiting the potential of doing business in South Africa.