SA business confidence up but economic policies may need revisiting - SACCI

The South African Chamber of Commerce and Industry’s business confidence index picked up by 3.3 index points to 87.9 in July after shedding 2.3 index points in June‚ however‚ SACCI warned that the low domestic economic growth rate was not merely the consequence of cyclical or other short-term factors‚ but had deeper underlying problems.

The BCI was still 34 index points below the high level of 121.9 recorded in December 2006 and about 12 points lower than the average of 100 for 2010 that serves as a base year for the BCI.

“Productive fixed investment‚ higher value added export volumes‚ productivity and work ethics hold the key to the current economic stalemate. This emphasises the need of persistent higher economic growth without which South Africa’s economic problems cannot be alleviated‚” the chamber said.

“Present circumstances provide an opportunity to change direction towards a more normative (and) acceptable policy approach serving longer-term economic growth imperatives.

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“It becomes apparent that even the NDP (National Development Plan) and certain aspects thereof need revisiting given the current stance of the world and domestic economy.”

SACCI said South Africa was becoming more and more aware of the stark economic realities individual countries faced notwithstanding economic ties and relationships with the world economy‚ Africa‚ the BRICS formation or other countries.

“Globalization implies that countries cannot escape from developments in the world economy - directly or even indirectly through impacts on second tier countries. Little can be done by a relatively small economy like South Africa to discharge the global effect.”

SACCI said it was rather matters that had local origins which allowed countries to reconsider policy directions.

Although the BCI bounced up in July‚ it did not recover to above the medium-term downward trend of business confidence.

In June only one of the thirteen sub-indices were positive month-on-month; nine were negative and three remained unchanged.

“The uninspiring comparative year-on-year business mood did not change for the better in July 2015. Four of the six financial sub-indices were negative‚ one unchanged and one was positive in July year-on-year.”

A notable positive month-on-month impact came from building plans passed in July while export volumes improved well on the previous month. Retail sales volumes made a marginal positive month-on-month impact on the BCI in July.