Business confidence at five-year low

07 Oct 2008 12:29 - Staff Reporter

SA's business confidence index fell to a new five-year low of 89,9 in September as a global credit crisis dampened sentiment.

South Africa’s business confidence index (BCI) fell to a new five-year low of 89,9 in September as a global credit crisis dampened sentiment, a survey showed on Tuesday.

The South African Chamber of Commerce and Industry (SACCI) said its BCI declined from 90,5 in August to its lowest level since September 2003.

A banking crisis in the United States and Europe has sparked a flight from risky assets across the world and fears of a slowdown in global growth.

“Although most emerging economies are not directly exposed to the global financial crisis to the extent that advanced economies are, the contagion effects of recessionary conditions will be realised through international trade and financial flows,” the SACCI said in a statement.

“As global investors become more risk averse and financial conservatism features more prominently, the flow of capital to emerging markets is likely to decline.”

South African businesses and consumers are also trying to cope with high domestic interest rates.

The central bank lifted its repo lending rate by five percentage points to 12% between June 2006 and June 2008 to tame inflation, before leaving rates steady in August.

It is widely expected to keep the repo unchanged on Thursday, before cutting rates in 2009.—. .