The South African Chamber of Business’ (Sacob’s) Business Confidence Index (BCI) dropped by 4,4 index points in May to 102.4 from 106,8 in April.
This is the lowest level this year for the BCI and the lowest since April 2002, Sacob said.
The largest year-on-year effect came from the all-share price index, which was down 29% on 2002, preliminary figures on export volumes which were down 24% on 2002, the number of new vehicle sales (down 8.8% on 2002) and manufacturing
output (down 1% on 2002).
Of major concern during May, Sacob said, was the discovery that some statistics issued by Statistics South Africa were incorrect.
“Of particular concern was the fact that the statistics on inflation data were reviewed for the last 16 months, and overstated by more than two percentage points in April 2003.
“Sacob laments this state of affairs since many economic and business decisions or surveys, including the national budget, were based on incorrect data,” the business chamber added.
It said the present economic situation left the monetary authorities with no choice but to lower interest rates as soon as possible.
“Sacob supports the view that at least a 1,5 or even 2 percentage point drop in interest rates is necessary, since the downward phase of the business cycle clearly calls for an easing of business conditions that, if left too late, could cause structural damage if not attended to,” it asserted.
With GDP growth already predicted to come in below 2% for 2003, it was clear that some measures were needed to bolster a struggling South African economy, it said, adding that some general economic indicators tended to confirm that in certain sectors a full-blown recession was present or was threatening.
“Adding to the woes of business activities in general, South African exports are facing serious obstacles in the quest to grow this sector. In addition to the strong rand eating away at export earnings, exporters face increasing frustration about port congestions and the inability of SA ports to efficiently provide expanded logistical support to this growing sector of the economy.
“The Zimbabwe situation, which is developing into further chaos and anarchy, will continue to impact negatively on the South African economy and other economies in the region. The situation there cannot continue unabated indefinitely and Sacob calls on all leaders in the region and the rest of Africa to exercise strong leadership to avert a lasting crisis in that country.”
Added to this, Sacob said, there was a growing concern about the government’s views on land redistribution measures, exemplified by AgriSA and other stakeholders’ concerns over government utterances in this regard.
“Sacob believes that such unguarded statements do not bode well for any sustained future investments in the economy, be they domestic or foreign,” it said.
“Sacob sincerely hopes that all stakeholders, understand that the overall economic situation and business climate in South Africa is currently subdued and in danger of losing more ground,” it added. – I-Net Bridge