Cape Town - Data released on Thursday from the South African Chamber of Commerce and Industry’s (Sacci) Business Confidence Index (BCI) showed that South Africa’s business confidence benefited from a stronger rand last month after the BCI inched up by 1.7 index points to 94.9points in June from 93.2points in May.
Sacci said the major contributor to the up-tick in the index in the period was due to higher merchandise import and export volumes, the improved rand exchange rate weighted against the US dollar, British pound and the euro, and increased new vehicle sales.
Richard Downing, an economist at Sacci, said at present the index was informed by deliberations on economic policy that could adversely affect investor and business confidence. “The SA economy is in the downward phase of the business cycle since December 2013 (43 months) - the longest downward phase since the March 1989 to May 1993 phase of 51 months,” Downing said.
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Responsible discussions on the economic way forward would have to take place before unintended consequences of economic regression; unemployment and increased poverty are set in motion that could lead the economy into a long-term structural trap.
“Working a country’s way out of a downward phase of the business cycle under normal economic circumstances can be achieved by anti-cyclical policy options that are well known in successful countries. However, to find a way out of a recession (more complex) given a less fortunate credit rating makes it a matter of urgency.”