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Business confidence in SA remains subdued

by , 03 July 2013

Today, the South African Chamber of Commerce and Industry (SACCI) released its business confidence index for June. This key indicator fell slightly from its May figure, showing that the business climate in SA was still pretty bleak…

The South African Chamber of Commerce and Industry (SACCI) confirmed today that business confidence remained at a low ebb with the release of its business confidence indicator (BCI) for June.

The index “slipped to 90.2 in June from 90.4 in May,” reports Fin24.

This is the “lowest level since 2003,” notes IOL. Worsening “inflation expectations” and the US Federal Reserve’s plans to step down its stimulus programme “to support the economy’s recovery” are being blamed for the low figure.

The BCI is put together from “13 economic indicators,” adds IOL. These include “retail sales, inflation and financial gauges, such as a stock market index and currency”.

Of the 13 components making up the business confidence index only two were positive

“Only manufacturing and buildings construction” indicators were positive for June compared with May, notes BDLive.

Following release of the BCI for June, SACCI stated that “businesses in emerging markets must be prepared to accommodate a reduced liquidity environment” reports MoneyWeb. Much of the extra cash from the US Federal Reserve’s stimulus programme had “found its way to emerging economies’ capital markets”.

SACCI highlighted its concerns “about the capacity of the economy to deal with global liquidity constraints” and “higher inflation” in SA, notes Fin24.

The depressed BCI levels currently seen are vastly different from those seen in 2006. For the first half of that year, the average was 119.5, adds BDLive.

With the current pressures on the economy, it’s unlikely we’re going to bounce back to those levels in the near future. Only time will tell how businesses learn to cope with the current economic environment.

Business confidence in SA remains subdued
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