The SACCI Business Confidence Index (BCI) for March 2013 has dropped to the lowest level since April 2000.
Business confidence remained fragile as the BCI declined to 90.4 in March 2013. The BCI continues its downward trend while the South African economy is officially still in an upward phase of the business cycle.
In March 2013, the BCI was 5.3 points below the March 2012 level and 2.6 points lower than in February 2013. Although the year-on-year difference reduced somewhat in March 2013, it occurred at a stage where the business climate is at a disturbingly low level.
Various factors contributed to decline
The monthly decline in the BCI from 93 in February to 90.4 in March 2013 is largely caused by the indicators of the financial environment deteriorating. The sub-indices on inflation, the rand exchange rate, borrowing, share prices and precious metal prices all turned negative from the previous month.
The financial environment was more restrictive than a year ago and may weigh on an already stressed real economy. The continued weakening of the rand is of special concern while inflationary expectations could be on the rise.
Thirty percent of South Africa’s GDE is on imported goods and services while South Africa exports about 28% of its domestic output. For South Africa, global competitiveness therefore remains important whether in the Brics context or in the global context.
Will Brics save the day?
SACCI is concerned that gross savings in the RSA was only about 13% of GDP in 2012. The Brics formation and agreements might be helpful in channelling funding from the newly industrialised Asian economies (where savings amounts to no less than 32% of their GDP).
As a Brics member, SA should take a cue from some successes of other Brics members. Business and investor confidence improvements are predicated on sound global economic relationships to the benefit of SA.