Johannesburg | Tuesday
SACOB’s Business Confidence Index (BCI) further declined to 103,2 in October, a drop of 1,5 points on the back of the substantial drop of 4,3 points recorded in September, the business chamber said in a statement.
This is a clear indication that the world events of the last two months are still feeding through to the economy, impacting negatively on SA’s international trade position, the one area of the economy that has been performing well.
The BCI was still above the lowest level this year of 102,5, recorded in April. In comparison to October 2000, the sub-indices of the rand’s weighted exchange rate, the weighted US dollar gold and platinum price, the volume of merchandise imports, liquidations and real building plans passed, deteriorated. Manufacturing output and the all-share price index were at about the same level as a year ago.
Compared to the previous month, five sub-indices improved, one maintained the September level and seven declined.
Speaking at the release of the BCI in Johannesburg, Sacob CEO Kevin Wakeford, said that the economy’s dependence on an excellent export performance would now have to be matched by a dedicated focus on domestic economic growth and development.
In his comments on the medium term budget represented by the Minister of Finance, Wakeford said that the budget confirmed macro-economic stability and reaffirmed a measure of certainty in the economy. He, however, considered the postponement of the privatisation of state assets to next year as unfortunate, locking out much needed FDI.
Wakeford also appreciated the fact that inflation has now been brought under control.
However, he felt that the maintaining of the target range for 2003 and the tightening of the targets for 2004 and 2005 would place a major responsibility on government and other stakeholders to institute measures to stay within those targets, given the fact that administered prices were rising by more than the targets as well as the effect of a depreciating rand on the economy.
Wakeford commended the Minister of Public Enterprises for her firm approach to the wage negotiations in the public sector which brought some reassurances about this sector in the economy.
Wakeford also commended the Minister of Public Enterprises for her firm approach to the wage negotiations in the public sector which brought some reassurances about this sector in the economy.
Wakeford once again called for the abolishment of the remaining foreign exchange controls and said that the announcement by the Reserve Bank that foreign exchange deals had to be backed up by a valid transaction, was perceived by the markets to imply a tightening of exchange controls.
On domestic economic growth and development Wakeford called for more focus on small business development. He believed that business unity is vital to develop and broaden the economic base of small and micro enterprises which he believed could only be achieved through institutional integration via the unity process at local level.
He said that unity was the only way through which more economic integration across all sectors at local level could take place, in order to revive this sect or of the economy. He also touched on rural and agricultural development and said that the acceleration of the land reform process could revitalise this sector from one of survivalism to one of sustainable economic activity.
Sacob economist, Richard Downing, said that the global slowdown in economic performance would probably make its presence felt more severely in the rest of the world during this quarter and the first half of 2002. The terror attacks in September and a possible Argentinean debt default added to scepticism of emerging market economies and spurred a shift to hard currencies. Against this backdrop, South Africa’s expected growth rate of more than 2% for 2001 could be regarded as reasonable, he added.
He further said that room for fiscal manoeuvrability and imaginative supply side measures with regard to the tax structure and capital formation should be considered without giving up on fiscal prudence and achievements thus far. – Sapa