South Africa’s business confidence edged higher to a new peak in December despite a further central bank interest-rate hike, and the trend is likely to continue in 2007, a survey showed on Thursday.
The South African Chamber of Business’s (Sacob) business confidence index rose to 103,5 index points from 103,2 in November, which was a recovery from 99,5 in October, its poll showed.
The boost in confidence comes despite the country’s central bank raising its repo rate by 200 basis points to 9% in 2006, in an effort to curb inflationary pressures. The latest half percentage point hike came on December 7.
Sacob said on Thursday that confidence in the business community was largely driven by solid economic growth, which it expected to be 4% this year.
”It might be lower than the estimated 4,4% in 2006, but if based on high real fixed-investment growth and a more sustainable rate of increase in real expenditure, it could lay a sound basis for higher future growth,” it said.
The business body added in a statement it was still optimistic despite challenging political and social developments, including some of the highest levels of crime in the world.
”We’ve had everything from political leadership problems to major officials in court action to union strikes,” Richard Downing, Sacob economist, said.
”All these things combined have a bearing on the business environment, and could harm it,” Downing added.
Sacob said business confidence was headed in the right direction despite several uncertainties.
”There will still be some uncertainties with the rand, the current-account deficit, but overall I think business confidence will prevail, it is headed in the right direction,” Downing said. — Reuters