Covid-19: SACCI says uncertain trade conditions prevailing

Trade conditions remain constrained but stable - SACCI

The Covid-19 pandemic and recessionary economic conditions have impacted the business climate negatively and resulting in further uncertain trade conditions says South African Chamber of Commerce and Industry (SACCI).

“The State of Disaster announcement and the lockdown starting on the 26th of March caused a sudden disruption of already volatile trade conditions,” said SACCI CEO, Alan Mukoki.

“These events did not have a major effect on trade during March, but more significantly affected trade expectations. 

“The seasonally adjusted Trade Activity Index (TAI) declined by 3 points to 37 in March while the seasonally adjusted Trade Expectations Index (TEI) dropped by 4 index points to 41 – i.e. well into negative terrain.

“The Moody’s sovereign credit downgrade to junk status in late March did not in particular impact trade conditions in March 2020. “

Mukoki said that sales volumes and new orders received were notably hard hit – respectively 65% and 62% in negative territory.

“For instance, the notable negative effect on new vehicle sales in March was troubling. Supplier deliveries and inventories, however, maintained their February levels.

“Sales expectations and expected new orders for the next six months took quite a blow as both these indices declined by 18% in the March trade survey,” he described.

“Expected supplier deliveries and inventories are also to deteriorate over the next six months. Both sales and input prices are expected to decline but to remain above the 50-index mark.”

Mukoki added that according to respondents the National Lockdown is creating unrecoverable costs and may incur further financial losses due to further compromised trade conditions.

“Covid-19 had a worsening effect on an already depressed trade environment and cause serious disruptions for the supply and offset chains – notably the consequence for expectations,” he said.

“Respondents fear loss of business with a noticeable impact on job losses if some adjustment on lockdown regulations is not considered. The effects of covid-19 are expected to remain with the trade environment for the whole of 2020.

“Although there was not an immediate serious negative impact on jobs in March, employment opportunities remain scarce with the sub-index declining by 3 index points to 41 while employment opportunities will remain tight in the next six months with the sub-index remaining in negative territory on 41.”

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