After bouncing back to 98,7 in October, the SACCI Business Confidence Index (BCI) dipped to 96,9 in October, which is its lowest level since June 2004 and a new low for 2007.
The South African Chamber of Commerce and Industry (SACCI) said on Wednesday that businesses were becoming more concerned about international economic developments as well as local adjustments.
”Business confidence has lately been declining more meaningfully after being in a moderating trend since the beginning of 2007,” it said.
It added that the magnitude of the decline in October suggested that corrections might become more pronounced. In October the BCI was 2,6 index points lower than in October 2006 and not less than 6,6 points lower than the record level of 103,5 recorded in December 2006.
”The real economic sub-indices of the BCI are in general dipping below or towards their longer-term trends. The positive developments in some of the ‘financial’ sub-indices in October 2007 were rather motivated by international developments that mirror uncertainty and short-term sanctuary, than encouraging domestic issues.
”SACCI is concerned that the global economic slowdown and financial market uncertainty in particular may have a more severe impact on countries with large current account deficits and volatile portfolio financial inflows. South Africa is fortunate to still obtain net financial inflows that more than cover the deficit.
”However, the strength of the rand at present, although anti-inflationary, does not help to put the balance of payment issues on the right track,” the chamber noted.
”SACCI notes that more businesses are experiencing difficulties with local policy dichotomies, global corrections and structural modifications that are creating considerable ambiguity and are impacting negatively on business confidence. It is therefore imperative that business should be prepared for an environment that is more fickle than predictable,” the chamber added. – Sapa