The SACCI Business Confidence Index (BCI) for December 2023 reached a notable 112.1, marking the second-highest level for the year, surpassed only by the January 2023 peak of 112.9.
“Throughout 2023, the BCI maintained an average level of 109.6, consistent with 2022, and higher than the 108.5 recorded in 2021. Although the BCI experienced a dip in the middle of 2023, it rebounded in the fourth quarter, concluding the year at 112.1 in December,” explains Alan Mukoki, SACCI CEO.
“The December 2023 level of 112.1 increased marginally to 112.3 in January 2024, potentially indicating a sustained elevation in business confidence. However, the economic landscape in South Africa presents several challenges for both the economy and the business community.”
Mukoki adds that critical events such as Budget 2024 and the State of the Nation Address (Sona) are anticipated to play pivotal roles in shaping business confidence for the year 2024.
“Between December 2023 and January 2024, eight out of the fourteen BCI sub-indices contributed positively to the overall BCI, two remained unchanged, and four had a negative impact,” he notes.
“These combined movements led to a modest 0.2 index point improvement from December 2023 to January 2024.
“Noteworthy short-term positive impacts in January 2024 were observed in increased merchandise imports, higher sales of new vehicles, a rise in inward tourism, and an uptick in retail sales. Conversely, reduced volumes of merchandise exports had the most significant negative impact.
“Comparing January 2023 to January 2024, the BCI experienced a minor decline of 0.6 index points, in contrast to the month-on-month improvement of 0.2 index points in January 2024.”
Mukoki says while these changes were relatively small, they suggest a degree of stability in the BCI. Inward tourism emerged as the only sub-index making a significant positive impact over the year to January 2024.
“Less severe negative effects were attributed to reduced real values of building plans passed, lower volumes of merchandise imports, a weaker and volatile rand exchange rate, and a decrease in the number of new vehicles sold,” he describes.
“South Africa’s economic policymakers are confronted with numerous challenges, including achieving inflation targets, maintaining an appropriate monetary policy stance, and alleviating wage and price pressures.
“Fiscal tightening must align with the monetary policy stance, necessitating a restructuring of budgetary capacity to handle externalities, an expansion of the tax base through enhanced economic growth, and the mitigation of public sector debt. These considerations should take centre stage in Budget 2024.
“The State of the Nation Address (Sona) and Budget 2024 will be instrumental in determining the trajectory of business and investor confidence in 2024.The upcoming State of the Nation Address (Sona) and Budget 2024 will be decisive for determining the future course of business and investor confidence in 2024.”
For a full background to this month’s SACCI BCI see the full BCI report on www.sacci.org.za