The South African Chamber of Commerce and Industry's (Sacci’s) business confidence index (BCI) reached 117.3 in December – a level last seen in October 2015.

The yearly average for Sacci’s BCI of 109.6 in 2022 also surpassed the pre-Covid-19 level of 107 in 2019, as well as the improved 2021 level of 108.5.

Business confidence gained strong momentum towards the end of 2022, with the BCI having improved from an average of 108.6 in the first half of the year to 110.7 in the second half.

On a quarterly basis, the improvement was even more pronounced, as the BCI improved from an average 108.9 in the third quarter to 112.5 in the fourth quarter.

The December BCI level of 117.3 was 6.4 index points higher than that of November and 10.9 index points higher than in December 2021. It, however, appears that the strong upward momentum has waned, as the BCI dipped by 4.4 index points between December and the 112.9 recorded in January.

On a month-to-month basis, eight of the fourteen subindices had a positive impact on the BCI between December and January.

Among these subindices were increased merchandise import volumes, increased tourist numbers, better real retail sales as a result of Black Friday and higher share prices.

Energy supply (including electricity blackouts) had a direct and severe negative effect on business confidence in January, although the lower cost of fuel provided some relief but remained relatively high (23% higher than a year ago), Sacci reports.

The medium-term (year-on-year) business environment remained positive, as the BCI still improved on last year but at a slower pace than previously, it notes.

The most prominent and only notable year-on-year positive impact was made by tourism, while increased new-vehicle sales also reflected a positive business climate.

Towards the end of 2022, economic data pointed towards improving conditions, with the holiday period being free of the regulations and limitations that were in place in 2021. These perceptions fuelled positive expectations among business and the public in general, Sacci says.

However, electricity supply shortages were looming in the background. This had only a short-term positive impact on confidence, knowing that with higher energy demand at the start of 2023 the electricity crisis might escalate, it adds.