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S. Africa's business confidence Index up in June

Xinhua, July 7, 2016 Adjust font size:

South Africa's business confidence index (BCI), released by the South African Chamber of Commerce and Industry (SACCI) on Wednesday, jumped to 95.1 in June from 91.8 in May.

"The recaptured index points (between May and June) is an indication that the pace of deterioration of the business climate and the economy may have plateaued," SACCI said in a statement issued in Johannesburg.

The business confidence and investment in South Africa can be lifted if red tape and quicker approval of investment projects is cut down, Wandile Sihlobo, an economist at Agribiz, told Xinhua in response to the figures.

Another economist concurred with Sihlobo. "Improving infrastructure development and addressing labour issues were among some of the factors that, if addressed, could grow the economy," said Richard Downing, SACCI economist.

Downing, however, voiced concern with the country's labour laws which he said were stifling economic growth.

South Africa's economy contracted by 1.2 percent in the first quarter of 2016.

The economist predicted that the SA Reserve Bank (SARB) would not hike its repurchase rates on July 21, as the country was faced with sluggish economic growth, weak demand and the stubborn high inflation.

But Downing warned that he expected the SARB to raise rates in the last quarter of the year.

With South Africa's economy forecast to grow at the slowest pace since 2009, the weakening economic outlook is undermining job security and consumer confidence, according to Mohammed Nalla of Nedbank, the country's fourth-largest lender.

As Britain faces recession following its pullout from the EU, known as Brexit, the exit might have a negative effect on the South African economy and the global economy, SACCI said.

SACCI's BCI is not a survey of businesses but a composite weighted index of 13 subindices that are tracked every month.

Four of the subindices (imports, retail sales, share prices and real financing cost) fell during June, while seven (manufacturing, exports, vehicle sales, construction of buildings, inflation, precious metal prices and the rand exchange rate) increased, and two (energy supply and real private sector borrowing) remained stable. Enditem