The SA Chamber of Commerce and Industry (SACCI) Business Confidence Index (BCI) has decreased by 12.1 index points to 77.8 in April 2020. The BCI is a composite index of economic and financial market indicators rated by business as critical indicators of the business climate.
“This is the lowest level ever, for the SACCI BCI since its inception in 1985 and the second sharpest month-on-month decline. On an annual basis, the SACCI BCI declined by 15.9 index points between April 2019 and April 2020,” said SACCI CEO, Alan Mukoki.
“High volatility was prevalent in global financial markets in April and was also mirrored in South African financial markets.
“The rand exchange rate; share prices; and commodity prices – notably the crude oil price, continued to reflect global and local uncertainty and unpredictability.
“The further easing of the monetary stance in South Africa and the leniency of commercial banks provided some relief to business and households as the impact of the lockdown took effect.
“The banking sector’s efforts were evidenced by the positive impact by the financial sub-indices of the BCI. ”
He said that seven of the thirteen sub-indices weighed negative on the BCI compared to March, but despite the present unpredictability and uncertainty in the business environment, six sub-indices were still contributing positively to the business climate.
“Four of the six financial sub-indices positively influenced the business climate while real economic activity was more harshly affected with five of the seven economic activity sub-indices BCI being negative,” Mukoki added.
“Strikingly negative monthly impacts on the BCI were caused by the lower volume of merchandise exports; the weaker exchange rate of the rand against the major trading currencies; and less new vehicles sold – mainly due to the lockdown, but also affected by the credit downgrade and a subdued economic performance.
“The marked annual decline of the BCI between April 2020 and April 2019 was particularly exerted by the weaker rand, depressed new vehicle sales, lower merchandise import volumes, and much weaker share prices on the JSE.
“Financial conditions were somewhat easier in April 2020 and mainly due to lower inflation and lower real financial cost than a year earlier.”
He added that it remains imperative that the economic performance recovers rapidly after the effects of the lockdown has eased.
“This could provide an opportunity to build a cohesive and more equitable society. The essentials of increased capital formation and the restoration of a business climate conducive to private sector participation and investor confidence over the longer-term remain preconditions for an economy in difficulty.”