Business confidence in December rose to its highest level for 2005, the South African Chamber of Business (Sacob) said on Thursday.
The business confidence index (BCI) registered 129,4 in December after measuring 126,5 in November.
”This is the highest level for the BCI in 2005 and 4,9 index points above last year’s December level,” the chamber said in a news release.
The BCI increased by 3,6 index points during the course of 2005, compared with 2,2 in 2004, 16,7 in 2003 and 3,2 index points in 2002.
The demand side of the economy remains exceptionally strong, and as this is spilling over into imports, the deficit on the current account could pose a problem later in the year.
Some other important issues Sacob emphasised that could affect business confidence in 2006 include:
The rand exchange rate remains pivotal to business confidence;
Price stability (low inflation) plays an important role in keeping business confidence high;
The recent strong economic growth has confirmed the business confidence levels of 2005;
Real activity in the primary and secondary sectors do not share the same overall positive business environment;
The effect of a too strong rand and the unintended consequences of some trade agreements on certain sectors need careful consideration;
Continuous net capital inflows at 6,5% of GDP is an imperative to finance current domestic spending that has spilled over into imports;
Proper management of public-sector institutions need to be extended to all tiers; and
The increasing tax burden of general government needs to be assessed.
”Sacob is of the opinion that there are many opportunities given the improved economic growth performance, if the risks are carefully assessed and acknowledged.
”A strategy developed in time to deal with the risks and/or prospects becomes paramount.” — Sapa