Business confidence recovers from 35-year low

Boosted by improving global economic activity.
Image: REUTERS/Mike Hutchings

South African business confidence recovered from a 35-year low in July as global economic activity improved, but the measure remained below average, over worries about the slow re-opening of the economy and soaring local infections.

On Wednesday, the South African Chamber of Commerce and Industry’s (SACCI) monthly business confidence index (BCI) rose to 82.8 in July from 81.4 in June.

The index plunged to 70.1 in May, its lowest since the survey began in 1985 and below last year’s average of 92.6.

The business body said one reason for the recovery was that “the global economy has moved beyond the economic trough”.

SACCI added that the slow re-opening of the local economy and allegations of government mismanagement relating to COVID-19 procurement was sapping enthusiasm.

Last week, President Cyril Ramaphosa set up a ministerial committee to investigate alleged corruption in state tenders in the fight against COVID-19

Between March and June, South Africa enforced one the world’s strictest coronavirus lockdowns, forcing mines, manufacturers, retailers and services to shut down or operate under tight regulation.

The lockdown has since been eased, although bans on alcohol and tobacco sales remain and travel is restricted to business purposes. In-bound tourism also remains restricted.

But despite the strict lockdown, coronavirus infections in continent’s most developed economy recently passed 500,000.

“It is essential the South African government should be sensitive to the effects of the lockdown process and its deleterious effect on the business environment,” SACCI said in a statement.

“The balance should rather lean towards opening up activity than following a rigid approach that adds little to mitigating the pandemic.”

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Tremendous jump!

R E C O V E R , hardly a word I would use.

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