RMB/BER INDEX: Business confidence rises in first quarter of 2022 but remains in negative territory

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The RMB/BER Business Confidence Index (BCI) rose three points in the first quarter of 2022, but at 46 remains in negative terrain below the neutral 50 mark. And with the return of serious load shedding and fuel prices surging because of Russia’s war in Ukraine, the outlook is anything but bright.

“Although this is just below the neutral 50 mark reached in the second half of last year, the latest reading is nonetheless encouraging in that it equals the BCI’s long-term average which, at 46, is a far cry from the five-index-point low recorded at the height of the Covid-19 pandemic in 2020,” RMB said.The index that is at its long-term average goes back to the late 1970s.

Under the current Ramaphosa administration, business confidence has continued to take a battering from policy inertia and a failing state which battles to keep the lights on and can hardly provide basic public services. There has also been the Covid-19 pandemic, often draconian lockdowns and a gut-wrenching economic contraction of 6.4% in 2020, not to mention the terrifying riots of July last year and record unemployment.

Three sectors in Q1 2022 showed a rise in confidence levels, with new vehicle dealers leading the race, with sentiment among them rising to 54 from 41. This is in line with “Also showing an improvement in the first quarter was manufacturing. Its BCI jumped from 38 to 43, owing to continued strong domestic sales and exports. Production would have increased even more were it not for ongoing supply chain bottlenecks and shortages of key inputs constraining activity,” RMB said.

 

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