Business Unity SA buoyed by earnings growth

Corporate balance sheets are “strong and clean”, Business Unity South Africa deputy chief executive Raymond Parsons said in Parliament on Wednesday.

Parsons said in a submission to the standing committee on finance that earnings growth appeared to have been positive in several sectors.

“Liquidations and insolvencies have declined this year,” he said.

“Private fixed investment is gradually rising. The deployment of commitment of corporate resources will nevertheless depend on improved confidence in the business sector to strengthen economic momentum.

“Busa’s overall impression is that corporate balance sheets are currently strong and clean.”

Parsons said the rand was instrumental in containing inflation for the greater part of 2011, “counteracting” the negative impact of the rapid surge in commodity prices in the first half of the year.

However, the currency’s strength and volatility had hampered export oriented sectors, such as manufacturing, prompting the call for the South African Reserve Bank to intervene more in the currency market.

“According to the IMF [International Monetary Fund], South Africa’s reserves remain below the adequacy range, allowing for more room for reserve accumulation,” Parsons said. — Sapa

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