Perfect storm of bad news leads to another decline in business confidence

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Business confidence in South Africa seems to be a rollercoaster ride, picking up before it declines again.

This is why business confidence has declined again: the foreign trade account with less imports and exports, with the rand exchange rate, impact from inflation and uncertainty of energy supply adding to the negative mix. The South African Chamber of Commerce and Industry Business Confidence Index declined by 2.1 index points between October and November to 92.8 and by 0.6 index points between November 2021 and November 2020, while the BCI averaged 94.0 for the first eleven months of 2021, 8.

The BCI had a severe decline in April-May last year due to the first level 5 lockdown, but since then business confidence gradually recovered lost ground, reaching around 96.5 in May-June 2021, a level last experienced towards the end of 2018. The rand exchange rate also had a negative influence on business confidence between October and November, but not so much compared to November 2020. A number of events and developments in October and November affected the global and local economy that influenced the business climate, with some economies experiencing positive and negative issues simultaneously, while others still had to deal with pre-Covid issues.

Global supply chain bottlenecks due to the rapid spread of the Delta variant that also affected delivery timelines and manufacturing output. Higher inflation is expected in global context rising by 2 percentage points to about 3%, 11% in sub-Saharan Africa and 5.5% in emerging markets.In South Africa, the radical civil unrest in July highlighted the risk to logistics, law and order, the destruction of trade facilities and food security, adding an undesirable negative dimension to the economic recovery.

SACCI believes that more effort is needed to promote the health advantages of being vaccinated and how much medical science has improved the lifestyle of all citizens.

 

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