being the lowest in three years.
According to the South Africa Chamber of Industry (SACCI), South Africa’s business confidence index dropped to a 3-year low from 95.7% in March to 94.3% in April. Last month’s figure was 8.2 points below the April 2011 level.
The index is compiled from 13 economic indicators, including retail sales, inflation and financial gauges, such as a stock-market index and currency.
The Johannesburg-based industry, SACCI attributed the drop to the decline in both the global and domestic business climates – weak consumer spending. “The current trend in the BCI that started in April 2011 can be ascribed to deterioration in both the global and domestic business climates,” a statement released by SACCI revealed.
“With high and rising unemployment and available household resources under stress, the expectation that household consumption expenditure should spark the economic recovery grows weaker,” it added.
Two of the six financial sub-indices were positive while one was neutral. Five of the 13 sub-indices improved on a year earlier in April 2012 while three of the seven real economic sub-indices made positive contributions to the BCI.
SACCI also revealed that the real economic environment was also more encouraging although only marginally so, with three of the seven sub-indices impacting positively (month-on-month) on the business mood in April 2012.
As a result of this, SACCI says “Sound and sustainable economic growth should be enhanced to inspire more households with credible financial credentials to become more active economic participants. Business remains ready to accommodate sound sustainable consumer demand,” said On April 25, South Africa’s Central Bank said lending remains “risk-averse” and consumers are reducing debt, the central bank said in its Financial Stability Review.
The statement also revealed that households’ income statements and balance sheets remain weak. According to South Africa government, Africa’s biggest economy (South Africa) may experience a 2.7% decline this year from 3.1% last year as a recession in Europe curbs demand for exports.
