The SA Chamber of Commerce and Industry (Sacci) business confidence index increased to a nine-month high in November despite various economic challenges faced by businesses.
The increase was driven mainly by tourism and merchandise import volumes that improved in month-on-month terms.
Sacci said the BCI increased to 111.5 points in November from 108.6 in the prior month. The index inched up from an average of 109 in the first 11 months of 2022 to 109.4 for the same period in 2023.
In comparison to November 2022, when the BCI stood at 110.9, the latest figure indicates the business climate and economic circumstances did not inspire improved confidence over the past 12 months, given the country’s unresolved economic challenges.
The Sacci BCI assesses financial and economic data affecting business sentiment and evaluates their long-term effect on business confidence levels.
Sacci CEO Alan Mukoki said while the index managed to regain a few points in November, it does not necessarily indicate a shift towards a favourable business climate or a restoration of upward momentum.
“A significant portion of the positive sentiment can be attributed to the resilience and endurance demonstrated by civil society and businesses. The key lies in the public sector’s ability to promptly address and resolve challenging adjustments,” Mukoki said.
He added that swift actions in this regard could mend the upward momentum of businesses and, more crucially, restore investor confidence, ultimately serving as a catalyst for a higher economic growth rate.
“Creating such a positive environment necessitates fostering appropriate international relations and ensuring supportive human and fixed capital stock as essential prerequisites, especially in the context of an open economy like SA,” Mukoki said.
A breakdown of the data shows between October and November this year, 11 out of 14 subindices either showed positive changes or remained virtually unchanged.
Three subindices had a negative impact on business confidence during this period.
The index improved by 2.9 points from October to November 2023. On a year-on-year basis, the index only improved by 0.9 index points compared with the 2.9 index point increase from October to November.
Sacci economist Richard Downing said increased inward tourism, higher merchandise import volumes and lower core inflation were the standout positive contributors year on year.
“However, fewer new vehicle sales, the weaker and more volatile rand exchange rate, and high real financing costs were the main negative factors impacting business confidence negatively in November 2023 compared to a year ago,” he said.
Since SA is a relatively open economy with significant exposure to international trade and investment flows, it is affected by global economic trends.
With world economic growth expected to face challenges, with increasing disparities between countries, policy options will be constrained, leaving little room for errors.
Downing said setbacks from the 2020 Covid lockdown, the conflict with Russia and Ukraine and renewed tensions in the Middle East have impeded global economic momentum.
“The flexibility observed at the beginning of 2023, coupled with progress in controlling inflation, demands careful monitoring,” he said.
He said economic performance remains below pre-pandemic levels, especially in emerging market and developing economies.
“Cyclical concerns, such as a stringent monetary policy to curb inflation and reduced government support due to high debt-servicing costs will continue to exert pressure on real economic activity.
“In the SA context, extreme weather conditions, floods, the July 2021 riots and the impact of state capture mentioned in the Zondo commission report have added an extra burden to the economy and business environment,” Downing said.
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