South Africa‘s business confidence fell in August to 90.5 from 94.7 in July after activity was hit by a decline in merchandise export volumes, a weaker rand and higher inflation, a survey showed on Wednesday.
In its monthly business confidence index (BCI) survey, the South African Chamber of Commerce and Industry’s (Sacci) said only three of the 13 sub-indices surveyed had improved in August compared with their July readings. Five others were unchanged and five were negative, it said in a statement.
The BCI stood at 89.6 points last August, Sacci said.
“The largest negative month-on-month impacts were by merchandise export volumes, the weaker rand exchange rate and higher inflation,” Sacci said.
The rand has lost around 16% against the dollar since January. Inflation stands at 5.1%.
Business confidence raced to a 2-1/2 year high in January after Cyril Ramaphosa’s election as leader of the ruling African National Congress (ANC) in December, with the private sector anticipating business-friendly policy changes following years of uncertainty under former president Jacob Zuma.
Investor sentiment has since waned, and data released last week showed the economy had entered a recession for the first time since 2009, undermining Ramaphosa’s efforts to revive the economy after nearly a decade of stagnation under Zuma.
“The positive mood that prevailed at the beginning of 2018 has been overtaken by uncertainty and events that weigh on the economic prospects for South Africa,” Sacci said.
South Africa‘s credentials as an investment destination had been tainted, Sacci said.
Ramaphosa announced in July that the ANC plans to change the constitution to allow the expropriation of land without compensation, as whites still own most of South Africa‘s territory, unnerving investors and weakening the rand.