The SACCI monthly Business Confidence Index for March was recently published. Flat global economic growth rates remain a concern – especially notable in some of South Africa’s major trading partners. Weaker trade and output levels and country-specific challenges are adding to pressure on growth prospects. Although global output is expected to increase over the medium term (notably a better performance by the Chinese economy), the risks are still slanted towards a weak economic growth.
Local events impact the domestic economy
The contentious and widely debated issue regarding the possibility of nationalising the South African Reserve Bank (SARB) emerged on public platforms during the month. This matter arouses fears of the negative impact of a non-independent central bank on the economy.
Moody’s did not publish its latest rating assessment of the South African economy at this stage, providing some reprieve from the fear of a rating downgrade, albeit temporary. Concerns of weaknesses in almost all SOEs, and in particular Eskom is what fuels fear of a Moody’s downgrade of the country’s public debt.
Load shedding during March 2019 was unexpected, and its impact on the well-being of the economy, in particular business, consumers and investors were notable. In this context, the South African Chamber of Commerce and Industry has stated on 22 March 2019. It highlighted the following matters:
• Load shedding is having a devastating negative impact on business.
• It will postpone the economic recovery.
• There will be potential job losses and business closures.
• Explanations did not create confidence that problems will be solved.
• There appears to be a lack of practical solutions and time frames to fix electricity outages.
• The government must take bold and decisive steps to solve the problem.
• A review of resource allocation of the workforce, systems, capital and ideas to achieve optimality, and.
• Unstable electricity supply is draining enthusiasm and investor confidence.
SACCI’s BCI, as a reflection of the business climate, continued to decline in difficult and uncertain global and domestic circumstances. Moody’s non-pronouncement of its ratings and the tenacity and resilience of households and business provides hope of a positive response to policy certainty after the elections. .It is only after the general election in May 2019 that we will get clarity on the elements that influence business confidence. A copy of the full Business Confidence Index is available at secretary@middelburginfo.com.