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JOHANNESBURG - South Africa’s troubled economy received a further blow yesterday with business confidence in June retreating for a fifth consecutive month with the Ramaphoria effect fast dissipating. 

The South African Chamber of Commerce and Industry’s (Sacci) monthly business confidence index (BCI) fell to 93.7 points in June, compared to 94 points in May. On an annualised basis, the BCI was 1.2 index points lower than the 94.9 points recorded in June last year. 

The company blamed the annual decline in the BCI to less merchandise export and import volumes, versus a year ago. Sacci said a weaker rand also contributed. 

The biggest negative monthon-month influences on business sentiment were the weaker trade-and-investment-weighted rand exchange rate, lower real retail sales, the decreased real value of building plans passed, and the higher, less stable, cost of energy supply. 

June’s decline in business sentiment also marked a spectacular fall in the index which reached a two-and-a-half-year high of 99.7 points in January as Ramaphoria gathered steam. 

Sacci economist Richard Downing said uncertainties surrounding economic policy directions and positions had to be clarified urgently so that investor and business confidence could regather itself. 

“It appears that a turning point with regard to the fiscal demise might have been reached. The magnitudes of the challenges, however, remain extensive. Attention should now shift and concentrate on the way forward,” Downing said. 

The local currency has also been battered in recent months as the trade war between the US and China and a widening trade deficit led to additional volatility and weakening of the rand exchange rate. 

The Bureau of Economic Research last week said that in light of the gathering global risks and an apparent stalling in Ramaphosa’s reform momentum, it had downscaled the rand forecast significantly. 

The organisation forecast the local unit to trade in a broad range of R13 to R14 against the dollar to the fourth quarter of next year, ending the period around R13.40. 

John Ashbourne, a senior emerging markets economist at Capital Economics, said the latest business confidence added to the evidence that South Africa’s economy struggled in the second quarter.

“The figures have only strengthened our view that the optimism that surrounded the February inauguration of President Cyril Ramaphosa has not translated into a real or sustained boost for South Africa’s long-struggling economy,” Ashbourne said. 

“We will have a clearer idea of how things performed when May’s mining and manufacturing output figures are released tomorrow.” 

Statistics South Africa is expected to release May’s activity data for mining and manufacturing, which may provide a better indication of how industrial production fared in the second quarter. Both sectors fared poorly in the first and were the main contributors to a 2.2 percent contraction in that quarter. 

“We expect mining production to remain on a downward trajectory, contracting for the third month in a row by around 3.5 percent year-on-year,” Investec economist Lara Hodes said. 

June’s subdued business sentiment data was the second index that measured South Africa’s captains of industry to disappoint. 

The Merchantec CEO Confidence Index released on Friday tanked from 60 points in the first three months of the year to 47.4 points, a downward spike following the optimism of last quarter’s increase in sentiment.