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Q1 business confidence rises, but remains in negative terrain

This is a bad omen for a country in desperate need of a growth kicker, economist says.

JOHANNESBURG – South Africa’s business confidence rose slightly in the first quarter but remained in negative territory, a survey showed on Wednesday, an outcome that could jeopardise efforts to boost economic growth.

The Rand Merchant Bank (RMB) business confidence index compiled by the Bureau for Economic Research rose to 40 points in the first quarter from 38 in the last three months of last year, remaining below the 50-mark separating net positive and negative territories.

The index has only been above the 50-mark on four occasions since 2008, a pattern RMB said was consistent with an economy treading water.

“It’s concerning that respondents continue to show little, if any increased willingness to ramp up fixed investment as well as headcount. This is a bad omen for a country in desperate need of a growth kicker to help safeguard its investment grade sovereign credit rating,” RMB chief economist Ettienne Le Roux said. 

Africa’s most industrialised economy is struggling to attract investment, with sentiment dimmed by political uncertainty, weak growth that has hit consumer activity, as well as the looming threat of credit downgrades to junk.

The economy contracted 0.3% quarter-on-quarter in the final three months of last year. 

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