The March Business Confidence Index (BCI) rose to its highest level since September at 88.3 points, the South African Chamber of Commerce and Industry (SACCI) said on Tuesday.
“The BCI is 5.1 index points higher than a year ago and is at its highest level since September 2008 when the BCI stood at 89.9,” said SACCI.
Only two of the seven real economic activity sub-indices were positive (retail trade and building activity).
“The financial environment remained conducive to a positive business climate in the short-term. Threats to the positive outlook in the financial environment include new risks in the global economic environment, commodity price movements and geo-political instability.”
Though the BCI improved on a year-to-year basis in March, South Africa’s performance in the international trade environment could constrain improvements in business confidence if global competitiveness concerns are not addressed actively.
The contributions of the sub-indices on an annualised basis were evenly balanced as six sub-indices were positive and six were negative, while one remained undecided.
“Uncertainty gripped the world economy and stock markets and currency markets reacted nervously to the earthquake in Japan on 11 March 2011. Following the initial concern about the impact of the crisis in the world’s third largest economy, the consensus appears to be that the longer-term consequences of the disaster for the world economy will be relatively muted,” explained SACCI.
It said that the Japanese economy will take some time to recover as infrastructure repairs take place. The pace at which the damaged rail and road networks are repaired and at which corporate operations are restored will determine the pace of the Japanese recovery.
Additionally, the political turmoil in the Middle East and North Africa, which encompassed a greater number of countries during March 2011, “is of greater immediate concern given the current and potential impact on the crude oil price and the consequences for global inflation,” said SACCI.
“The domestic economy appears to have regained some momentum in business confidence, but the index remains sensitive to domestic socio-economic developments. The conduct of the local government elections, the decisiveness with which corruption is dealt with and the level of labour dispute activity will be key determinants of whether the BCI breaches the significant level of 90.” – BuaNews
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