SA's business confidence rises

| Friday March 5, 2010 00:00

The BCI had lost some momentum over the festive season and had dropped by 2,3 points month-on-month in January.

Sacci on Wednesday noted that while only six of the thirteen subindices had had a positive impact on the index in February, compared with nine in January, the lower liquidations data and increased manufacturing output had had a significant impact on the BCI in February.

The retail sales, construction, inflation and rand exchange subindices had also made positive contributions to the February data.

However, the negative influence of the imports and exports indices had continued to weigh on the local business environment, noted the chamber. On a year-on-year basis, eight subindices had made positive contributions to the index in February.

This was two more than the year-on-year figures for January.Sacci noted that additional positive contributions in February came from subindices on real economic activity, 'suggesting enhanced levels for the BCI in 2010'.  The chamber highlighted that a number of events and announcements had supported greater economic optimism, while some had also contributed to uncertainty over the medium term.'Service delivery as prioritised by the President in his State of the Nation Address is essential in ensuring fiscal discipline and value for budgeted allocations. Debt servicing cost will cause a significant shift in functional expenditure towards the category general public services over the next three years, unfortunately at the expense of mainly economic services,' stated the chamber.It also warned that unintended economic consequences would emerge as the higher electricity tariffs were implemented.

The National Energy Regulator of South Africa, last week approved an electricity tariff increase of 24,8 percent as from April 1, 2010, as well as a 25,8 percent tariff increase for 2011/12 and a 25,9 percent increase for 2012/13.This was despite concerns that the increases could lead to more job losses and that it would lead to higher inflation.'Business confidence would have received stronger support if the approach to electricity supply and pricing had been appropriately managed over the longer term,' it said.

However, Sacci noted that the gross domestic product figures for the fourth quarter of 2009 had indicated that the economic turnaround that was started in the third quarter of last year was gathering momentum.

The country's GDP grew by 3,2 percent in the final three months of 2009, when compared with the thrid quarter, but dropped by 1,4 percent when compared with the fourth quarter of 2008.-(Engineeringnews)