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Q3 business confidence up slightly but still in the negative

Political uncertainty and weak domestic demand weigh on index.

South Africa’s business confidence rose marginally in the third quarter, but remained in negative territory as most investors remained dissatisfied, a survey showed on Wednesday.

The Rand Merchant Bank (RMB) business confidence index compiled by the Bureau for Economic Research rose to 35 points in the third quarter from 29 points in the second quarter, remaining firmly below the 50-mark separating the net positive and negative territories. 

South Africa emerged from a recession in the second quarter as agriculture helped the economy expand more than expected, official figures showed on Tuesday, strengthening the rand and bonds.

Read: SA economy recovers from recession in second quarter

But the country has also been suffering from repeated high-level corruption scandals and political turmoil.

The latest survey results suggest seven out of every ten respondents remained unsatisfied with business conditions, RMB said.

“While the small increase in the third quarter RMB/BER BCI is encouraging, the improvement must be seen in the broader context of continued weak domestic demand, subdued business activity, low profitability (for most respondents) and heightened political uncertainty,” RMB chief economist Ettienne Le Roux said in a statement.

South Africa relies heavily on foreign money to cover its large budget and current account deficits but could struggle to attract investment if political tensions linger on and economic growth does not return. 

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