DOMESTIC business confidence improved in December but the World Bank predicts SA’s economy to grow just 1.1% this year.
The business confidence index (BCI) for December published by the Chamber of Commerce and Industry (Sacci) revealed that business confidence improved by a further 1.3 points to 96.4, following the improved business mood in November. The BCI was nearly seven index points better in December than the lowest level last year of 89.6 in August.
“The improvement in the business mood is partially explained by the BCI, as political developments in southern Africa contributed. Further, the anticipation for more policy certainty and growth-orientated domestic economic policy, global economic growth should further augment the business mood,” Alan Mukoki, Sacci CEO, said.
Four of the 13 BCI sub-indices had a positive month-on-month impact in December, five sub-indices moved sideways and four were negative. “The business mood has been supplemented by improvement in the financial markets,” Mukoki said.
However, Mukoki said the challenges faced by fiscal consolidation, unemployment, excessive debt, low growth and sovereign credit ratings required visionary leadership.
Richard Downing, Sacci’s chief economist, said there were signs of optimism beyond the improvement in the BCI. “Economic dynamics in southern Africa have set in motion the realisation that economic performance could improve to serve the broader population,” he said.
Meanwhile, the World Bank forecasts global economic growth to edge up to 3.1% this year while growth in emerging market and developing economies as a whole is projected to strengthen to 4.5% as activity in commodity exporters continues to recover.
But South Africa’s economy is expected to grow just 1.1%, one of the lowest rates in sub-Saharan Africa. Of the 43 countries in the region, only Equatorial Guinea and Zimbabwe were forecast to have lower growth rates than SA.
The bank said sub-Saharan Africa’s growth would average around 3.2% this year, compared with the world average of 3.1%.