Business confidence accelerates to pre-Covid-19 lockdown levels
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JOHANNESBURG - BUSINESS confidence increased to above pre-Covid-19 pandemic levels in November on low inflation and the resumption of activity amid the easing of lockdown restrictions.
The SA Chamber of Commerce and Industry (Sacci) said yesterday that its business confidence index (BCI) rose to 93.4 index points from 92 in October.
The reading was the highest since
April 2019, and better than the 92.7 print in November last year. The BCI had bottomed out to about 70 index points in May before bouncing back in June and then gradually regaining lost ground to reach 93.4 in November.
Sacci, however, said confidence remained plagued by poor economic performance, recessionary conditions, high unemployment and fiscal unsustainability.
It said the present short-term month-on-month recovery of 1.4 index points in the BCI was primarily the result of the low base of activity from where the recovery was gradually gaining traction.
“Low inflation, the recovery in certain trade categories, and the reset of international trade and commodity prices, are the major developments that contributed to an improved business climate at present,” Sacci said.
“The continuing easier and positive financial conditions, however, appear to be waning somewhat in relation to real economic activity that is gradually being restored to pre covid-19 levels.”
Sacci said South Africa needed policy decisions that restore foreign and local investor confidence, economic growth, and employment creation.
“It has become clear that structural reform is necessary in South Africa,” Sacci said.
Old Mutual's chief economist Johann Els said further upward numbers could be expected in the fourth quarter.
Els said the economy was now expected to contract 7 percent this year from an earlier prediction of an 8.1 percent contraction.
“The V-shape recovery will likely mean that wild growth is slightly better than feared previously,” Els said.
“We still sit with the level of GDP significantly below what we had before the Covid-19 crisis. According to my numbers, they'll still take us into 2022, before we reach the 2019 year level again.”