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Economists say declining business confidence shows that more needs to be done to boost the economy Photo: Getty Images
- The South African Chamber of Commerce and Industry (SACCI) has released its business confidence index for August and September.
- After a sustained recovery since June, the index fell slightly by 0.1 index point in September.
- Economists say this mild regression shows that the initial gains from the lifting of the toughest lockdown restrictions are now normalizing, and more needs to be done to boost the economy.
A sustained decline in retail sales volumes, falling JSE share prices and declining credit to the private sector continued to stifle business confidence in South Africa in September. And despite the fact that almost all sectors of the economy have opened after the strict shutdown, the South African Chamber of Commerce and Industry (SACCI) said business confidence in the country appears “to be having a hard time regaining its pace.”
After confidence levels recovered in June and July from the deterioration recorded in the first two months of the lockdown, the SACCI said its business confidence index fell marginally again in September.
August had seen how the index, which measures the confidence and expectations of companies in the future, and by implication affects their plans to invest or delay planned spending in a country, improve to 85.8. That represented a three index point improvement from July. But the index fell 0.1 index points in September and was still 6.7 index points below its September 2019 level.
“This shows that it is not just about unlocking the economy by easing the lockdown. There were some setbacks in the economy. Therefore, it will take some time for the economy to recover. More should be done than simply unlocking the economy,” said The SACCI economist. , Richard Downing.
The SACCI Business Confidence Index is slightly different from the RMB / BER Business Confidence Index, which surveys business leaders to find out what they think about the future. Rather, the SACCI is based on technical data such as retail sales, merchandise exports and manufacturing production.
Dr. Azar Jammine, director and chief economist at Econometrix said the unemployment data released last month could have influenced the index if it also incorporated employment figures.
Jammine said that as South Africa lowered lockdown levels, the rebound in economic activity was different. The passage from levels 5 to 4 and 3 meant the opening of more sectors. But when the country moved to level 2 and level 1, the remaining restrictions that were lifted were relatively small.
“You should not expect the recovery to continue at the same pace because the commensurate benefits you get from lifting the few remaining lockdown restrictions are relatively minor. The message is that we will not go back to where we were before the Covid-19 Virus for a few years yet. “said Jammine.
SACCI said that the South African economy remains in a fragile situation and therefore the government must continue to implement enabling policies that will encourage the business sector to accelerate growth and employ people.
The body that represents approximately 20,000 small, medium and large companies in all economic sectors of the country said that although the passage to blockade level 1 has launched the process of restoring the economy, it is necessary to take corrective measures for the unsustainable fiscal situation in all public sector institutions.
“High-profile public arrests for corruption will go some way to restore the confidence of local and foreign investors, but more structural economic adjustments are required to steer economic policy in a credible direction and towards growth and job creation.” SACCI wrote in the statement.
