Sacci economist Richard Downing said that the constrained business mood had made it impossible for South Africa to take advantage of the improving global economic climate.
“The economic overview delivered during the Medium Term Budget Policy Statement (MTBPS), confirms the dilemma the South African economy faces at present and the medium-term. The Sacci BCI currently mirrors this disappointing situation.
“Although the overall business climate was relatively unchanged between September and October, the subdued economic performance continued to limit business opportunities,” Downing said.
International rating agency Moody’s last month’s said the MTBPS was a move away from the fiscal consolidation and had damaged an already feeble business confidence and growth.
Sacci said the average for the the first ten months of this year was 94.1points, compared to 93.4points for the corresponding period of 2016. In August, the index fell to 89.6points - the lowest since 1985.
Higher merchandise import volumes made the largest positive impact in October followed by merchandise export volumes and real retail sales.
The lower real value of building plans passed, the weaker weighted rand exchange rate and higher inflation were the sub-indices making the biggest negative monthly impact. South African Institute of Race Relations chief economist Ian Cruickshanks said that business conditions were improving, albeit at a low level.
“Business confidence is still low, but levelling out. Maybe the levelling out is taking place before we see a marked improvement in confidence.
"All in all, there are some positive signs,” Cruickshanks said.
In September, the Rand Merchant Bank (RMB)/Bureau of Economic Research (BER) business confidence index saw a marginal increase in the third quarter, but remained subdued with seven out of 10 respondents dissatisfied with prevailing business conditions in the country.
The RMB/BER said the index rose by 6points to 34points after plunging from 40 to 29 points in the second quarter - its lowest level since the 2009 financial crisis.
While South Africa exited a technical recession in the second quarter, the constrained business confidence has proven to be a pitfall that the country continued to grapple with.
Downing said consistency in tried and tested economic policies should be followed to create certainty for investors and business over the longer term.
- BUSINESS REPORT