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Business is ‘hesitant’

| Economic factors

Business seems to be awaiting some sort of movement from the government about SA’s economic future, based on the latest index from the South African Chamber of Commerce and Industry.

In a statement released, SACCI CEO Alan Mukoki said the downward trend in the SACCI Business Confidence Index (BCI) has for the time been arrested as the BCI stayed around the 80 index mark.

After measuring 79.6 in December 2015, the SACCI BCI marginally improved to 80 in January 2016 and was virtually unchanged at 80.1 in February 2016. Since the more recent peak of 92.8 in February 2015, the BCI lost 12.7 index points.

“The continuing uncertain business climate and wavering economic performance exacerbated the hesitant business mood in February 2016. The lower credit rating in December 2015 and efforts to avoid a further downgrade confirm the imperative of turning the present economic direction around.”

Mukoki notes much will hinge on the application of policies outlined in the State of the Nation Address as well as in the Budget speech.

“The comparative year-on-year business circumstances in February 2016 were similar to those prevailing in January 2016 – two neutral, one positive and ten negative year-on-year moves by the sub-indices.

“With ten sub-indices negative year-on-year, one sub-index (value of building plans approved) positive and two undecided, the BCI was notably lower in February 2016 than in February 2015.

“In aggregate changes in real economic sub-indices from a year ago did not have a positive impact on the BCI in February 2016 while changes in the financial environment were more negative in February 2016 than in January 2016. However, real economic sub-indices were marginally better month-on-month in February 2016 than in January 2016.”

Mukoki adds “SONA 2016 and Budget 2016 were important proceedings that have the potential to stem the negative tide that has become a feature of the economy in 2015 and notably towards the end of 2015 and at the start of 2016. It is important that the statements be followed by concrete action and implementation.

“Results will take time to emerge and restore investor and business confidence. It is vital that the resolution of serious economic challenges and the intentions by policy makers bear fruit. This is a critical window of opportunity.”

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