The SA Chamber of Business’s Business Confidence Index for October dropped from September’s high of 130,9 to 126,5, Sacob said on Thursday.
”The October level of 126,5 is still at an exceptionally high level and not less than 10 points above the 116,5 of October 2003,” Sacob said in a statement.
The high business confidence level originated from a perceived favourable financial environment and was now strongly imbedded in robust real expenditure.
These spending conditions were perpetuated by a continuing strong rand and borrowers were lately making use of more banking credit despite a still stringent monetary policy, Sacob said.
”The sustainability of these spending levels is increasingly coming under scrutiny,” it said.
The trade account of the balance of payments did accommodate to a degree the prevailing buoyant spending conditions and it served as catchment area for the overspill of the present swelling domestic expenditure.
According to Sacob, policy options were limited under present circumstances but perhaps less favourable policy instruments like capital control measures should be applied more courageously.
The current positive economic environment provided an opportunity for acting proactively and timeously and belated action might over burden the supply side of the economy and the balance of payments.
It could also accommodate excessive debt burdens and create inflationary pressures that may dent business confidence, Sacob said. – Sapa