South Africa’s business confidence index (BCI) rose to 84,5 points in February from a six-year low of 82,4, lifted partly by slowing inflation and lower interest rates, a new survey showed on Thursday.
The South African Chamber of Commerce and Industry (SACCI) said positive domestic developments pointed to a more business friendly environment but warned a global downturn and turbulent markets continued to weigh on real economic activity, and confidence.
”Movements in the sub-indices for the rand exchange rate, consumer inflation, the gold and platinum price and real financing costs were positive for business confidence in February 2009,” it said in a statement, adding smaller declines in retail sales also affected the business climate.
However, the uncertainty related to global conditions meant confidence remained under stress and a one-month rise in the BCI should not be seen as a trend.
Consumer inflation is slowing sharply and interest rates were cut by 100 basis points last month, adding to the 50 basis points cut in December.
But, at 10,5% the central bank’s repo rate remains relatively high after being raised five percentage points between June 2006 and June 2008 to try tame a surge in inflation. — Reuters