Although there was another severe decline in business confidence in May and building confidence in the first quarter in 2023, there are signs that the business climate might be settling down after the uncertain effects of electricity supply have been factored in. The South African Chamber of Commerce and Industry Business Confidence Index declined by 4.2 index points in April 2023 and settled down at 106.9 in May 2023, a decrease of 10.4 index points since the BCI measured 117.
The index shows the largest negative short-term impacts were related to foreign trade relations with less merchandise import and export volumes, less inward tourists and the weaker rand exchange rate against major trade and investment currencies.Sacci says the business environment took a marginal dip in April 2023 but declined more severely in May 2023.
“The substantial swing from a surplus on the trade account in the first four months of 2022 to a notable deficit in the first four months of 2023 does not only reflect the effect of global trade on South Africa, but also indicate the economic sensitivity of South Africa to international trade relations.
The index fell to 28 in the second quarter from 33 in the first quarter of the year. The BER says the current level of the index means that more than 70% of respondents are dissatisfied with prevailing business conditions. “This is starting to wane in the face of the higher interest rate environment and possibly also an easing in the pace of semigration, among other things,” Siphamandla Mkhwanazi, senior economist at FNB, says.In addition to the softer growth this quarter, prospects for building work over the next few quarters also turned negative.