SA business confidence ticks up, despite Brexit fear

 In Business

BUSINESS confidence improved slightly in June compared with May, as an improvement in exports, an increase in building plans approved, and lower inflation outweighed concern about Britain leaving the European Union.

Although the South African Chamber of Commerce and Industry’s (SACCI’s) business confidence index (BCI) rose to 95.1 in June from 91.8 in May, it remained lower than the 97.9 recorded in June 2015.

Cutting down red tape and a quicker approval of investment projects by development finance institutions could help lift confidence and investment in SA, SACCI CEO Alan Mukoki said.

SACCI economist Richard Downing said improving infrastructure development and addressing labour issues were among some of the factors that, if addressed, could grow the economy, which contracted by 1.2% in the first quarter of 2016.

Downing did not think the Reserve Bank would raise interest rates on July 21, given weak demand and low economic growth, but warned that rand weakness and still-high inflation could lead the Bank to raise rates later in 2016.

A possible recession in Britain and weaker growth in the EU due to the repercussions of Brexit might have a negative effect on the South African economy and a struggling global economy, SACCI said.

SACCI’s BCI is not a survey of businesses but a composite weighted index of 13 subindices that are tracked every month.

Four of the subindices (imports, retail sales, share prices and real financing cost) fell during June, while seven (manufacturing, exports, vehicle sales, construction of buildings, inflation, precious metal prices and the rand exchange rate) increased, and two (energy supply and real private sector borrowing) remained stable.

by Ntsakisi Maswanganyi ,  06 July 2016, 11:56

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