SA business confidence down on recovery worries

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South Africa’s business confidence index fell in December on concerns that an economic recovery from a recession will be weak, sponsor South African Chamber of Commerce and Industry (SACCI) said today.

SACCI said in a statement the BCI fell to 83.5 in December from 84.1 in November and averaged 82.8 in 2009, the lowest annual figure since the 81.9 of 2002.

The industry body said despite the economy exiting a recession many of the consequences of the slump still pervade the local economy.
“Although the markets have factored in a more brisk recovery, both the global and local economies struggle to recover from the impact that the substantial disruption of the international financial system,” SACCI said in a statement.

South Africa exited its first recession in 17 years in the third quarter but consumers continue to struggle after a million job losses and high debt levels.

SACCI said concerns about management of public sector institutions and looming administered price adjustments contributed the uncertainty about the economy.

Government is yet to name a permanent chief executive at power firm Eskom, after the departure of Jacob Maroga in November. Eskom has asked for a 35% tariff increase a year over the next three to help finance its capacity-building programme.

Higher electricity prices have raised inflation fears and analysts have increased costs could hamper the recovery.

The central bank cut interest rates by 500 basis points between Dec 2008 and August 2009 to help stimulate growth.

SACCI said the economy would likely grow by 2% this year and the recovery of the BCI hinged on real macro-economic developments.



With monetary policy remaining at its current stance, gradual recovery in other economic indicators and the prospect of a successful Soccer World Cup, business confidence is likely to seek a higher average for 2010 than in 2009,” SACCI said.