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JOHANNESBURG - Business confidence in South Africa eased in May, putting a further damper on the gloomy economy, following worse-than-expected first-quarter gross domestic product figures on Tuesday.

The South African Chamber of Commerce and Industry (Sacci) yesterday said its business confidence index shed 2index points to 94points last month, marking the fourth consecutive period of decline.

The index recorded a two-year high in January on the back of Cyril Ramaphosa’s election as head of the ANC at its December conference.

Sacci economist Richard Downing said attention has now shifted to structural reforms that could place South Africa on the road to sustainable economic recovery.

“Once investment and employment creation are reinstated, business confidence should shed short-term variations and enhance economic growth and participation,” he said.

Sacci said the index was mainly dragged down by lower merchandise import and export volumes that weighed on the index. It said exports declined from R87.3billion in March to R78.3bn in April. Imports were down by R1.1bn. This led to a deficit on the trade account of R6.2bn in April, as compared to a surplus of R1.8bn in March.

Bianca Botes of Peregrine Treasury Solutions said the new data showed that the euphoria that accompanied Ramaphosa’s election was fading rapidly as the local economy struggled with growth and confidence.

“Decreased business confidence coupled with the dismal GDP figures released on Tuesday speak to structural challenges the business environment and economy of the country is facing,” she said.

Yesterday Nedbank revised its GDP growth forecast down to 1.5percent from 1.9percent following the disappointing first-quarter growth data.

NKC African Economics has also slashed its forecast to 1.5percent from 1.9percent.

FNB senior economic analyst Jason Muscat said the bank was reluctant to revise down its growth forecast for now, for two primary reasons.

“Firstly, the South African economy is not unfamiliar with a poor first quarter GDP number, and has indeed bounced back in the past,” Muscat said.

“Secondly, there were no revisions to the historical data, which suggests that this number could well be revised higher in future GDP releases, and GDP revisions have typically been upward, as opposed to lower.”

The Rand Merchant Bank business confidence index compiled by the Bureau for Economic Research is expected to release second-quarter data next week.

The first-quarter print, which was released earlier this year, rose to 45points from 34points in the fourth quarter, but remained below the 50-mark, separating the net positive and negative territories.