South Africa’s business confidence dipped in September, on high crime and expectations interest rate hikes may subdue business activity, the South Africa Chamber of Business (Sacob) said on Thursday.
Sacob’s Business Confidence Index (BCI) slipped to 97,7 in September from 99 in August — falling to its lowest level in 2006 and off a peak of 103,1 reached in April.
The industry group said business conditions might tighten towards the end of the year and further restrain confidence, but added that economy was still expanding.
”Although the latest economic information suggests the vibrancy in the South African economy is easing as a result of normal business cycle developments as well as corrections taking place to adjust imbalances, economic activity is still expanding,” Sacob said.
South Africa’s central bank has hiked its repo rate by a full percentage point to 8% since June to curb inflation, and more increases are expected this year.
The rand currency has lost 20% of its value against the dollar so far in 2006, partly on concerns about a current account deficit of more than 6% of gross domestic product.
But economic growth has so far held up well and is not predicted to fall significantly from the two-decade record high of 4,9% of 2005.
Sacob said the business community was also concerned about high crime rates and the drastic action that was needed to restore law and order.
South Africa has one of the highest crime rates in the world, with frequent violent attacks on businesses and armoured vehicles carrying cash.
”This could have a serious bearing on business confidence if not addressed urgently,” Sacob said, noting that the government had accepted business help in combating crime. – Reuters