What is straining S.Africa’s business confidence? - CNBC Africa

What is straining S.Africa’s business confidence?

Southern Africa

by Trust Matsilele 0

South Africa saw an improved business confidence in the month of July. PHOTO: postconsumers

South Africa’s export value boosted business confidence for July by 3.3 index points, but this could be short-lived due to poor perfomance in emerging economies. 

“Emerging markets growth has been supported over the past decade by the over accommodative Federal Reserve and a Chinese investment boom" this support is being withdrawn,” Worth Wray, chief economist at Evergreen Gavekal told CNBC Africa. 


Responding to the short-term gains numbers of July, Richard Downing, SACCI Economist told CNBC Africa that South Africa was largely boosted by the building plans passed in July.          

“The SACCI Business Confidence Index (BCI), picked up by 3.3 index points to 87.9 in July 2015 after shedding 2.3 index points in June 2015,” said SACCI in a statement. 

Downing said the worrying trend was that, the BCI was still 34 index points below the high level of 121.9 recorded in December 2006 and about 12 points lower than the average of 100 for 2010 that serves as base year for the BCI.

“The positive thing in the short term is that we have turned from the high negative we saw in June,” said Downing.

“In June only one of the thirteen sub-indices were positive month-on-month; nine were negative and three remained unchanged,” read the statement.

“A notable positive month-on-month impact came from building plans passed in July while export volumes improved well on the previous month.”  

Retail sales volumes made a marginal positive month-on-month impact on the BCI in July 2015. 

He also said there had been increased financial pressure following a rise in interest rates. 

SACCI added that the uninspiring comparative year-on-year business mood did not change for the better in July 2015. 

(READ MOREAre Africa’s fortunes surging or slipping?)

“Four of the six financial sub-indices were negative, one unchanged and one was positive in July year-on-year. Lower inflation (excluding petrol, food and non-alcoholic beverages) had a positive on the BCI in July 2015.” 

The Chamber called for persistent higher economic growth without which South Africa’s economic problems cannot be alleviated.

“SACCI is concerned that the present low domestic economic growth rate is not merely the consequence of cyclical or other short-term factors, but has deeper underlying problems."