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05 Aug 2009 11:47
South Africa’s business confidence index (BCI) increased marginally to 83,2 points in July, lifted by higher exports and easing inflation, a survey showed on Wednesday.
But the South African Chamber of Commerce and Industry (Sacci) warned that weak economic conditions, and disruptions through strikes and service protests, made for a tense and volatile business climate.
Business confidence has taken a knock over the past year with soft local and global demand slashing output in the key mining and manufacturing sectors, sending the economy into its first recession in nearly two decades.
While off the low of 78,9 hit in March this year, the BCI remains near levels last touched in 2003. It stood at 83,1 in June.
“Only higher export volumes and lower inflation had a positive impact on the BCI in July 2009 compared to six sub-indices in June 2009 that were positive,” Sacci said in a statement.
“Business confidence remains sensitive and each month there are areas in the business environment which show vulnerability to the prevailing economic conditions.”
It said the depth of the recession—the economy contracted 6,4% in the first quarter of this year—and rising unemployment were increasing pressure on businesses.
However, a firmer rand, slower consumer inflation and producer deflation, as well as lower interest rates would ease the “pain of the recession” and provide a basis for recovery.—Reuters
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