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The SA Daily 10 October 2019

Business confidence sweeter

Shireen Darmalingam

  • The September SACCI business confidence index surprised with a 3.3 pts improvement but stayed below the 100-pt benchmark at 92.4 pts, after 89.1 pts in August which was the lowest in 30 years. It’s still below the 93.3 pts as at end Q2:19. New vehicle sales sped up in September, while the stronger exchange rate relative to major trading partners lifted sentiment. Higher export volumes too played a positive role, although the global growth slowdown presents a key risk to this sub-component of the index. Any further improvement in the SACCI business confidence would depend on reforms.
  • We foresee modest near-term GDP growth but there is inherent risk in inadequate electricity supply. Still, medium-term growth should rise as Eskom’s financial situation is being addressed by government.
  • We therefore look to the Medium-Term Budget Policy Statement at the end of this month for clarity on government finances. The Chamber noted that “decision makers on economic policy should use this window of opportunity to further stabilise the economic situation and provide platforms for sustainable growth”. GDP growth will likely moderate to 0.5% in 2019 — but should reach 1.3% in 2020.

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