THE South African Chamber of Commerce and Industry (SACCI) today released its April Business Confidence Index (BCI) which it says reveals the “mammoth task” the county’s leaders face in restoring the economy to its full potential.
The BCI declined by 1.6 index points from 97.6 in March 2018 to 96.0 in April 2018. The Index improved by 1.1 index point year-on-year from April 2017. It is now six months since November 2017 that the BCI kept to levels above 95. The BCI improved from an average of 95.5 in the first four months of 2017 to 98.0 for the corresponding period in 2018.
Three of the thirteen sub-indices had a positive monthly impact in April 2018; five sub-indices were unchanged, and five had a negative month-on- month affect. Increased merchandise import volumes, real retail sales and the real value of building plans passed made the largest positive monthly contributions to the BCI while less merchandise export volumes, less new vehicle sales and the weaker rand made the most noteworthy negative monthly contribution to the April 2018 business climate.
The largest positive annual contributions to the business climate in April 2018 came from lower inflation, higher new vehicle sales, and the increased real value of building plans approved. Lower real merchandise exports and imports, and ongoing high real financing costs had the largest negative effects on the business climate compared to a year earlier.
“South Africa’s leadership has a mammoth task to restore the South African economy to its full potential that was rudely interrupted over the last number of years. The restoration process of the economy, starting by addressing maladministration and corruption, has been incisive and the market and economic indicators are reflecting those sensitivities,” SACCI said in a statement.
A simultaneous phase of the restoration process has to address the revival of economic growth and employment opportunities. “SACCI believes it is important that a team has been selected to market South Africa’s as an investment destination. Domestic savings are not enough (about 16% of GDP) to finance such a daunting investment effort. It is therefore an imperative that capital from abroad should complement the domestic savings effort.
“Investor confidence holds the key to restoring the potential of the South African economy. The present positive business mood is still in the process of repositioning with business confidence reflecting patience and anticipation. Increased certainty and increased fixed investment should provide the economy with the base for growth. However, political stability, and law and order are essential ingredients and preconditions for economic advances.”
For a full background to this month’s SACCI BCI see the Economic Commentary in the BCI report on www.sacci.org.za.