The South African Chamber of Commerce and Industry (SACCI) Business Confidence Index (BCI) has improved to 81,9 in April 2009 from a depressed level of 78,9 in March 2009.
Departing from 82,4 in January 2009, the BCI has been flirting at these lower levels and could now be drifting laterally, according to SACCI.
“Businesses remain under strain and although there were fewer liquidations in March 2009 than in February 2009, liquidations were 63% higher in the first quarter 2009 than in the first quarter of 2008.
Negative month-on-month trends were also recorded for the sub-indices on consumer inflation, the number of new vehicles sold, real retail sales and real credit to the private sector,” said SACCI.
The improvements on the rand exchange rate, the JSE, import volumes and export volumes confirmed “less frailty in business confidence, but not a turnaround”.
“Economic growth for South Africa is revised downward into negative territory as recessionary conditions are taking hold, prompted by the contraction in the economies of South Africa’s major trading partners in Europe and the US and slower growth in South East Asia.
“To some extent, the lower, but still positive growth in Asia should counter the extent and duration of the contraction in South Africa and sustain reasonable commodity prices as well as commodity exports from South Africa,” say the SACCI economists.
The current recessions in the affected economies are already more relentless and longer than their previous recessionary experiences. The global inflationary outlook has turned away from a deflationary environment to modest inflationary expectations.
World trade is expected to decline by 11% in 2009 but remain stable in 2010, with notably fewer imports by advanced economies in 2009.
SACCI says the major challenge for businesses is to anticipate, identify and prepare for the turnaround of the present economic slowdown. There are signs that a measure of optimism in global financial markets has emerged and that the worst is behind the global economy.
“The improvement in the SACCI BCI for April 2009 could mark a turnaround that may still be slow and weak but which could pick up momentum towards year-end as the global economy revives,” concludes SACCI. — I-Net Bridge