SA business confidence slips to 16-year low

Business confidence slipped to a 16-year low as the South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) slumped to 86.9 in May 2015 compared to t 86.8 registered in September 1999.

Five of the six financial sub-indices were negative year-on-year and one undecided whereas in April 2015, two were negative and four undecided. In May 2015 four real activity sub-indices were negative and three were positive, said Sacci economist, Richard Downing.

He pointed out that South Africa’s economic performance was falling behind both that of Africa and the rest of the world. “The disruption by electricity supply shortages is having a telling impact on the output of sectors such as manufacturing and electricity. This was reflected by recently released GDP data. Load shedding is also greatly disruptive to the services sector. This is of great concern to Sacci and notably to small and medium size businesses,” commented Downing.

More indications and suggestions point to tighter financial conditions that may lie ahead, including the fact that higher global interest rates and financial downgrading of South African institutions will compel South Africa to follow suit by increasing interest rates.