Business confidence increases
10 August 2007
The South African Chamber of Business (Sacob) released its business confidence index (BCI) for the month of July this week, with the index rising slightly from 99.1 in June to the current level of 99.6.
However, Sacob states that this figure is lower than the 100.2 reached in May this year, and that there is "no economic evidence to suggest that the small recovery of 0.5 in the BCI in July 2007 is in indication of a turning business mood".
Though the chamber is not concerned that political and social developments in Southern Africa will have an immediate negative economic impact, it remains wary of the impact of a prolonged distortion of the economies and social fibre in the region.
"An inevitable global evaluation process might result in the political and social aspects gaining more prominence with unpleasant real effects for the economies of the region," Sacob states.
The chamber says it is also concerned with the ineffectiveness of some state institutions in fulfilling their objectives, but points out that the government's infrastructure investment programme and the business-line approach followed in repositioning state institutions might offset negative developments.
It also cautions that it is necessary to review South Africa's emerging market position, in light of shifting global market sentiment and re-appraisal of investment strategies, and given the country's "less comfortable" position in the lower third tier of 25 prominent emerging market economies.
"Slowing global economic growth rates and a lower demand for commodities, could affect South Africa's relative position more detrimentally than that of other emerging markets," Sacob states.
The chamber adds that even though a few domestic economic concerns still impact on business confidence, the business mood is better than in June.
"Matters like inflationary expectations, continued excessive private sector borrowing, growing import volumes, slow pace of manufacturing output growth, and rand volatility are of ongoing importance."
SouthAfrica.info reporter
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