South Africa’s business confidence plunges to lowest level in 34 years

A sentiment index compiled by the South African Chamber of Commerce and Industry (SACCI) declined to 89.1 last month from 92 in July. That’s the lowest level since April 1985, according to the survey.

Weak economic growth, a sharp drop in export volumes and a weaker currency, rising debt and an unemployment rate of 29 percent continued to hurt the nation.

According to central bank data, Africa’s most-industrialized economy – which has dodged a second recession in as many years – is stuck in its longest downward cycle since 1945.

“We’re not talking about the same set of circumstances as back then, but you are seeing a similar economic climate,” said SACCI economist Richard Downing. “This time the main thing is the difficulty government is having in implementing what needs to be done.”

Data showed that seven of the 13 sub-indices in the business confidence index declined between August and July, four improved, while two remained unchanged.

Merchandise export volumes, the exchange rate weighted against major trading and investment currencies, and share prices on the Johannesburg Securities Exchange were the most negative contributors.

Another survey from the Bureau for Economic Research found that the Rand Merchant Bank (RMB) business confidence index slid to a two-decade low in the third quarter of 2019.

Business sentiment in Africa’s most-industrialized economy surged to a two-year high in early 2018 after Cyril Ramaphosa won the leadership of the ruling African National Congress and took over as president of the country. However, confidence waned since then as businesses continue to seek real reforms.

On Tuesday, ratings firm Moody’s warned of the risk of ongoing uncertainty and the slow pace of reforms.

A wave of xenophobic attacks in South Africa over the past three weeks has also added to concerns. Scores of foreign-owned shops have been looted and torched.

For more stories on economy & finance visit RT's business section