Thursday, 06 July 2017 11:30

Business Confidence Persevere

SACCI’s Business Confidence Index picked up by 1.7 index points to 94.9 in June 2017 from 93.2 in May 2017. Given an unpredictable economic and political situation, business remained resilient and proved perseverant. In June 2017, the BCI was 0.2 index points below last year’s June level of 95.1.

The SACCI’s Business Confidence Index (BCI) at present is informed by deliberations on economic policy that could adversely affect investor and business confidence. This could cause the economy to stutter further while battling recessionary conditions and could have lasting effects on unemployment, income distribution and rising poverty. A realistic approach that enhances the outlook for the private sector and its ability to mobilise capital could turn the economy away from faltering further.


The main contribution to the monthly improvement to the BCI in June 2017 was made by higher merchandise import and export volumes, the improved rand exchange rate weighted against the US dollar, British pound and the euro, and increased new vehicle sales. The largest negative monthly contribution to the BCI was by the decline in share prices on the JSE.

The stronger weighted rand exchange rate, increased merchandise import volumes and lower consumer inflation made the most notable positive year-to-year contributions to the BCI between June 2017 and June 2016.
A number of events took place during June 2017 that did not only increase uncertainty in the economic policy environment and business confidence, but also effected short-term economic variables and financial markets such as the volatility of the rand. These events include topics such as role of the Reserve Bank, mining charter, credit ratings, and the FICA applications and need to be addressed responsibly with investor and business confidence in mind.

Working a country’s way out of a downward phase of the business cycle under normal economic circumstances can be achieved by anti-cyclical policy options that are well known in successful countries. However, to find a way out of a recession given a less fortunate credit rating makes it a matter of urgency. More thorough discussions on economic direction will have to take place before unintended consequences of economic regression; unemployment and increased poverty are set in motion that could lead the economy into a long-term structural trap. In this context, business and households will have to be convinced of the road ahead before confidence will recover.

For a full background to this month’s click here
For more information, contact:
Alan Mukoki SACCI CEO 011 446 3800
Richard Downing SACCI Economist 082 822 5566