Business confidence remains stable at low levels

South Africa’s business confidence remained nearly unchanged in July, ending up by a marginal 0.5 points to 90.7, the South African Chamer of Commerce and Industry (Sacci) reported on Thursday.

On a year-on-year basis, six subindices of the Business Confidence Index (BCI) were negative, five were positive and two were neutral between July 2012 and July 2013.

The current BCI levels were markedly below the peak of 122.1 reached in December 2006 and the average of 100 for the base year of 2010.

Sacci pointed out that although the BCI remained depressed, global economic conditions appeared to be bottoming out.

“The openness of the South African economy was not only an opportunity and an advantage, but also a major challenge in that it compels South Africa to actively work at maintaining a competitive edge,” the chamber stated.

But, it said that, although the exchange rate of the rand could serve as an economic shock absorber over the short to medium term, South Africa would have to address known impediments to competitiveness in the interests of sustainable growth in economic activity.

Sacci further cautioned against some of South Africa’s macroeconomic aggregates that were below the median of its peer group, which suggested that the country had to prioritise issues relating to its inability to grasp global trade opportunities timeously and improve its current account position.

The chamber pointed out that the depreciation of the rand by 16% y-on-y against the dollar up to July, could provide temporary relief, but that the medium- to long-term remedy remained addressing specific competitive vulnerabilities that affected the country’s competiveness in the global market.

This year, the BCI was highest in January when it reached 94.0 percentage points.