South Africa’s business confidence slipped to a seven-year low in the second quarter of this year as two thirds of businesses surveyed reported dissatisfaction with a fall in sales volumes for retailers, a survey showed on Tuesday.
Rising inflation due to severe drought and a weakening currency have triggered a rise in lending rates over the past two years, strangling sentiment among businesses and consumers in Africa’s most industrialised economy.
The Rand Merchant Bank (RMB) index, which is compiled by the Bureau for Economic Research, fell to 32 from 36 in the previous quarter, with confidence among retailers falling to a level worse than that seen during the 2008/9 global financial crisis.
There was also a sharp deterioration in sentiment in the building and wholesale trade sectors, while the mood among manufacturers and new vehicle dealers was slightly improved.
“In fact, the economy might well have contracted,” RMB said in a statement.
“The collapse in retailers’ confidence, combined with the continued declines in the sales volumes of new vehicles as well as consumer goods at the wholesale level, suggest as much.”