South Africa’s business confidence inched up in July but there was no evidence that the small recovery improved producers’ mood, a survey showed on Wednesday.
The South African Chamber of Business’s (Sacob) confidence index (BCI) crept up to 99,6 in July from June’s 99,1, but the body said domestic economic concerns were still a concern.
”Inflationary expectations, continued excessive private-sector borrowing, growing import volumes, slow pace of manufacturing output growth and rand volatility are of ongoing importance,” Sacob said in a statement.
The main CPIX (consumer inflation less mortgage costs) index came in at 6,4% year-on-year in June, breaching the central bank’s 3% to 6% target range for the third month in a row, and making another interest-rate increase next week likely.
Growth in Africa’s economic powerhouse has been driven largely by domestic consumption, but manufacturing industry has been unable to meet demand, fuelling inflation and also putting pressure on the rand currency as imports flood in.
On Tuesday, central bank Governor Tito Mboweni said above-target inflation meant South Africa’s interest rates were more likely to rise than fall when its monetary policy committee meets on August 15/16.
Mboweni also said the manufacturing sector, which contributes nearly 17% to the country’s economy but still trails mining in export volumes, partly explained a gaping current-account deficit of 7% of gross domestic product.
Sacob said ineffectiveness of some state institutions placed a drag on business confidence and the economy, although infrastructure-investment programmes and the business-like approach of others might offset some of the negative impact. — Reuters