Business Confidence Reaches All-time High

08 Feb 2013

South Africa’s business confidence has reached a new high in 5 months, marginally increasing the index by one point to 94. The Johannesburg-based South African Chamber of Commerce and Industry has said this is the outcome of 13 economic indicators, including retail sales, inflation and financial gauges such as stock market and currency.  The others included manufacturing, vehicle sales and credit growth. These have boosted business confidence, and indicated the economy might recover more strongly in 2013.

The popular belief, however, was the barter trade with China was benefiting the country and shielding it from recessionary pressures. Now, with the statistics out, the piggyback ride on the Chinese dragon is not a panacea after all except for cheaper household plastic goods. 

The South African Central Bank is forecasting an economic growth of 2.6% this year, compared to 2.5% last year, the slowest pace since a 2009 recession. The Reserve Bank has kept the interest rate unchanged at 5% since July to help stimulate the economy that got bogged down by mining strikes and a slump in demand from Europe.

A weaker rand has clearly hurt investor confidence. The rand has dropped 4.8% against the dollar this year, the second-worst performer after the Japanese yen among the 16 major currencies tracked by Bloomberg.