(Reuters) – A South African business confidence index fell in the second quarter by 6 points, a survey showed on Wednesday, a sign the economy was struggling amid hopes that President Cyril Ramaphosa would help revitalise the country and attract investment.
The Rand Merchant Bank (RMB) business confidence index compiled by the Bureau for Economic Research fell to 39 points in the second quarter from 45 points in the first quarter, falling further below the 50-mark separating the net positive and negative territories.
However, RMB’s chief economist, Ettienne Le Roux, said that the trend in business confidence remains upwards, even if only tentatively so, despite the second-quarter decline.
Le Roux said that it was important that the political and policy factors currently weighing down on confidence were resolved.
First-quarter business confidence jumped 11 points, mainly because of the change in the country’s political leadership in February, when Ramaphosa was elected, RMB said in a statement.
But South Africa suffered its worst quarterly contraction in nine years in the first quarter. Gross domestic product shrank 2.2 percent, led by a slowdown in agriculture and mining, after expanding 3.1 percent in the final quarter of last year, Statistics South Africa said.
Earlier this month, The South African Chamber of Commerce and Industry reported its monthly business confidence index fell to 94 in May from 96 in April as trade declined and consumer inflation rose after an increase in Value Added Tax [nJ8N1OS02P].