This is primarily due to the fact that the country’s economic performance and business mood are at a low ebb.
(READ MORE: SACCI sees muted business outlook for 2014)
“Needs, expectations and demands are not commensurate with output, supply and value added. A series of negative economic and socio-political developments are also putting the economic outlook under severe pressure,” said the South African Chamber of Commerce and Industry (SACCI).
“The MTBPS is a critical policy event. Apart from responding to a weakening financial environment and addressing public finance issues, the MTBPS is also looked upon for directional change in terms of spending priorities, debt management, accountability and delivery.”
SACCI further stated that the Business Confidence Index (BCI) for September 2014 increased by 0.2 index point to 89.2 after improving by 1.1 index point in August 2014.
“Although it appears that waning business confidence has been checked, business confidence remains at an undesirably low level. Such a low confidence level was last observed in early 2000,” it said.
“The September 2014 BCI was 2.2 points below the September 2013 level of 91.4. It is of concern that the poor business confidence performance is extended over such a long period – an average of 91 for the SACCI BCI since December 2012.”
According to the chamber, while four of the seven physical activity sub-indices were positive month-on-month – imports, vehicle sales, retail sales and construction (buildings) – compared to three in August 2014, none of the six financial sub-indices of the BCI was positive.
The financial sub-indices include inflation, share prices, real private sector borrowing, real financing cost, precious metal prices and the rand exchange rate.
(READ MORE: Adapting to change in the business industry)
“More depressed levels of real economic activity than a year ago – year-on-year – reflect a significant handicap on the business climate. The lower year-on-year level of business confidence in September 2014 came largely from a more constrained financial environment than a year ago,” SACCI said.
“All six financial sub-indices weighed negatively on the BCI. It appears that the disruptions of the real economy in the first half of 2014 lead to broader consequences as it impacted various financial indicators.”