The South African Chamber of Commerce and Industry says business confidence stabilised in November -- but at low levels.
Business confidence stabilised in November but at low levels, the South African Chamber of Commerce and Industry (Sacci) said on Wednesday.
Sacci’s business confidence index (BCI) declined marginally to 97.4 in November 2011 from 97.5 in October 2011.
“The steadying of the BCI in November creates the possibility that the downward momentum in business confidence may have abated although the economic environment remains tentative,” Sacci said in a statement.
“Should the November 2011 Sacci BCI imply that the business mood has stabilised, the stabilisation has unfortunately occurred at less than desirable levels.”
The level of 97.4 is the lowest point since May last year.
“The serious decline in the BCI started in April with its fewer trading days.
Sensitive business environment
“This was followed by months of serious labour disputes and debates about the country’s policy direction,” Sacci said.
This sensitive business environment was then tested further by the uncertainty over the sovereign debt crisis in Europe.
Six of the sub-indices making up the BCI were positive in November compared to October.
These were vehicle sales, retail sales, inflation, share price, real private sector borrowing and precious metal prices.
The other seven sub-indices were negative month on month—utility services, manufacturing, exports, imports, construction buildings, real financing cost and the rand exchange rate.
South Africa was affected by the lower global economic growth and financial instability in Europe, Sacci said.
It impacted on South Africa’s gross domestic product with slow growth in the third quarter of 1.4%.
“Although the pace of decline in business confidence has receded, South Africa experienced a few unfortunate developments that dampened the business mood.
“Apart from sluggish economic growth, South Africa’s image as a prudently managed economy was affected by the change in the outlook for its credit rating from stable to negative,” Sacci said.
Last month, Moody’s rating agency changed its credit rating outlook for South Africa’s economy from stable to negative.
Sacci suggested South Africa could avert an actual downgrade.
“Regular reassurance to the markets of conservative fiscal management, appropriate fiscal priorities, leadership inspired by pragmatism as opposed to populism and a rebalancing from policy and ideological debates in favour of delivery could all serve to mitigate an actual sovereign downgrade.”—Sapa. .