South Africa’s business confidence index (BCI) dipped to a 5-month low of 82.2 in October as the economy struggles to pull out of recession, data showed today.
Business confidence has dived over the past year as weaker domestic and global demand hits output in South Africa’s key mining and manufacturing sectors, pushing the economy into its first recession since 1992.
The October showing for the confidence index, sponsored by the South African Chamber of Commerce and Industry (SACCI), was off a 10-month high of 85.5 points in September which raised hope the economy may be recovering.
“Although still higher than the depressed level of 78.9 measured in March 2009, maintaining higher business confidence levels will need continuous efforts to stimulate a favourable business environment,” SACCI said in a statement.
“Most economic activities are still below their long-term trend lines although the lower cyclical turning point may have been passed.”
SACCI said it was concerned a national budget deficit of 7.6 %of GDP would demand more capital from the economy, while a higher borrowing requirement by the public sector would lessen the domestic savings pool available to the private sector.
Confidence should however benefit from the further easing of exchange controls announced in the medium term budget statement last month, including the increase in the limit for company applications to make outward investment to R500 million from R50 million.