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Business confidence steadily being restored – Sacci

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Business confidence steadily being restored – Sacci

15th October 2024

By: Creamer Media Reporter

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The South African Chamber of Commerce and Industry's (Sacci's) Business Confidence Index (BCI) averaged 110.9 for the first nine months of this year – a 1.7 index improvement on the average of 109.2 recorded for the corresponding nine months in 2023.

Sacci comments that the slow but steady recovery in the BCI since June bears testimony to the degree of difficulties that mark the business environment and economic performance.

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After dipping by 6.9 index points between March and May, the index recovered by 3.7 index points to measure 111.5 in August. However, it declined to 110.2 in September.

"Only three of the fourteen subindices had a negative effect on the BCI in the short term, with eleven subindices in support of a positive business climate. Business sentiment was particularly positively swayed by more overseas tourist numbers, increased merchandise export volumes, an improving manufacturing output and lower inflation.

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"The most notable unfavourable evidence of negative business sentiment was fewer new-vehicles sold, struggling retail sales volumes and the decreased real value of building plans passed.

"Over the year to September, Sacci's BCI increased by two index points, with rising overseas tourist numbers, higher global precious metal prices, lower inflation and the stable supply of electricity and cheaper fuel at the pump as notable positive contributors to business sentiment," Sacci states.

It adds, however, that it is of "grave concern" to the chamger that 66 of the country's 257 municipalities are officially dysfunctional.

"Financial management and service delivery are two critical elements of these yardsticks and only 30 municipalities of the 257 are currently regarded as stable but with a further 161 at risk of failure. With real fixed investment taking place in these areas, it is important that the further demise of municipalities be reversed soon and urgently," it stresses.

Meanwhile, with inflation coming in below the mid target range, Sacci says it shares the South African Reserve Bank's concern that these positive price developments towards price stability may be exceeded by disproportionate higher electricity tariff increases and it’s multiplying effects. Other risk factors in terms of price stability include higher increases of administered prices and real wage growth that exceeds productivity advances.

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