Big rise in business confidence

07 February 2018 | Web Article Number: ME20188569

Commerce & Trade

SACCI Business Confidence Index (BCI), released this week, recorded its highest level of 99.7 in two and a half years in January 2018. In October 2015, the BCI measured 102.3. The BCI improved by 3.3 index points in January 2018 following on the improved level of 96.4 in December 2017 while the index is two points higher than the 97.7 of January 2017.

Apart from a more improved and positive business mood, there are indications from various short-term economic and market indicators that the pace and direction of change reflects a  more upbeat business climate.

According to SACCI, there is an expectation that new leadership will help foster more pragmatic and predictable business and economic policy options. “Although the present business confidence carries a great deal of positive sentiment, the investment environment will benefit most from this sentiment to enhance sustainable economic growth and employment prospects,” the chamber said in a statement.

Only three of the 13 sub-indices that comprise the SACCI BCI, had a negative monthly impact in January 2018; nine sub-indices were positive and one was unchanged. The ten positive and neutral sub-indices in January 2018 - following on the nine-monthly positive and neutral effects of December 2017 - confirm a continuing improvement of the business climate.

Increased merchandise trade import volumes, a stronger weighted rand exchange rate and higher retail sales volumes had the most notable positive monthly influence on the BCI in January 2018. The annual increase in the BCI in January 2018 was caused by ten sub-indices improving on a year ago, two sub-indices that remained unchanged, and one sub-index that was negative.

The largest annual positive contributions to the business climate were from lower inflation, increased merchandise export volumes, and more buoyant retail sales.

“If the present local positive momentum and policy changes could be effected, growth for South Africa could well exceed IMF forecasts. This could spur further reforms that cover structural impediments, lift potential output and make growth more inclusive,” SACCI said.

“It is therefore probable that the assessment of an environment that is ripe for local and foreign fixed investment, if achieved, will also greatly benefit and help to remedy the important challenges and adjustments facing the South African economy over the immediate and medium-term.”

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