Business confidence loses positive momentum

2010/02/08

The Business Confidence Index (BCI) lost positive momentum over the festive season, the SA Chamber of Commerce and Industry (Sacci) said on Monday. Its BCI for January 2010 declined by 2.3 index points to 81.2.

"The setback may be temporary given improved prospects for recovery," Sacci said.

From December 2009 to January 2010, nine BCI sub-indices had a positive effect on the BCI.

"Although more sub-indices had a positive impact in January 2010 than in December 2010, the decline in the sub-indices of import and export merchandise volumes had a relatively greater impact on the BCI than the other sub-indices." This demonstrated the impact of international trade on the local business environment. "The low import volumes are also reflective of weak domestic demand conditions and a languid domestic economy," Sacci said.

On a year-on-year basis six sub-indices had a positive impact on the BCI in January 2010, but the negative effect of the other seven sub-indices (mainly real economic activity), still caused the BCI to be 1.7 points lower than in January 2009. Sacci said although the anticipated recovery would be protracted in advanced economies, activity in emerging and developing economies was expected to be generally robust. "Sacci is concerned that the South African economy is yet to share in the vigorous economic recovery anticipated for key emerging market economies.

"The consequences of the recession may still pervade the domestic economy and contribute to the tentativeness in the business environment as well as in business confidence." Sacci said economies globally were experiencing differing levels of confidence although they were broadly trending in a positive direction.

"It appears that the restoration of confidence is a key ingredient of the economic recovery. "Opaque and incoherent policy signals will undermine local business confidence, investor confidence and the pace of economic recovery," Sacci added. (Source : Sapa)