DOMESTIC business confidence hit almost 100 index points in January, the highest level in two-and-a-half years, says the South African Chamber of Commerce and Industry (Sacci).
Sacci membership comprises 20 000 small, medium and large enterprises across the breadth of the nation and all economic sectors.
Large enterprises are generally direct members of Sacci while small and medium enterprises are members through more than 50 local and regional chambers and 15 national associations. The survey is based on the latest business mood and business climate.
Sacci’s Business Confidence Index (BCI) for January hit 99.7, the highest since October 2015 when the BCI measured 102.3. The index was at 96.4 in December and 97.7 in January last year. “The rebound in BCI is inspired by prospects of new political leadership. The market is positive and the domestic economy is also pencilled in to grow above 1% for 2018,” Sacci chief economist Richard Downing said.
The index did not factor in the pressure on President Jacob Zuma to resign, which has lifted the local market. According to the latest BCI, apart from a more improved and positive business mood, there are indications from various short-term economic and market indicators that the pace and direction of change reflects a more upbeat business climate. “There is the expectation that new leadership will lead to more pragmatic and predictable business and economic policy options.
“The present business confidence carries a great deal of positive sentiment, the investment environment will benefit most from this sentiment to enhance sustainable economic growth and employment prospects,” Downing said yesterday.
Increased merchandise trade import volumes, a stronger weighted rand exchange rate and higher retail sales volumes had the most notable positive monthly influence on the BCI in January. Downing said if the momentum continues and the political leadership favours investors, this could spur further reforms that cover structural impediments, lift potential output and make growth more inclusive.
Pele Dlomo, independent economist, said the latest Sacci BCI is encouraging, but what is transpiring at the moment regarding the future of President Zuma and who the market wants to present the state of the nation address (Sona) will come at a high cost. “Investors want Ramaphosa to deliver (tomorrow’s) state of the nation address. If whoever presents Sona is not what the market wants, it will cost South Africa dearly.
“Already the rand started trading on a back foot and the JSE is in the red because it is not clear who will be presenting Sona. This will come at a higher price and is not what South Africans want to see,” Dlomo said.
He said while it was too early to preempt what’s likely to happen, the business mood is a good sign of hope and for job creation ahead.