SACCI: Business confidence maintains improved level

In light of the impact of the lockdown on the business climate and economic activity, the private sector has shown resilience and tenacity with a substantial number of businesses managing to survive the adverse climate. This is according to the SA Chamber of Commerce and Industry (SACCI).

The SACCI Business Confidence Index (BCI) has recorded 94.0 in March 2021 – marginally down from 94.5 in January 2021 and 94.3 in February 2021. The BCI averaged 94.3 in the 1st quarter of 2021 compared to 91.6 of the 1st quarter 2020. “Nevertheless, the business climate remains constricted due to continuing economic uncertainty and the prospects of a further lockdown in the offing with rumours of a third wave of infections becoming prevalent. For the six months ending March 2021, the BCI average improved by 13.2 index points on the same average assessment of the preceding six months,” SACCI says.

The positive month-on-month contributions to the BCI in March 2021 were notably caused by the increased number of new vehicle sales and higher volume of merchandise imports followed by lower levels of inflation. Compared to March 2020, the year-on-year improvement in the SACCI BCI in March 2021 by 4.1 index points was mainly enhanced by easier financial conditions when compared with a year ago although more new vehicles sold in March 2021 also surprised on the upside. 

“During February 2021, the Minister of Finance presented his Budget 2021/22 to Parliament. In effect, the revenue forecast of the Medium-Term Budget Policy Statement (MTBPS), delivered in October 2020, did not materialize in its projections, which means, the fiscal dilemma still remains.”

SACCI says that of special concern is the effect of the public sector on the broader economy and the longer-term implications for the public sector to fulfil its role of delivering public collective services relative to the substantial social needs and the concomitant impact on poverty.

“Since the 3rd quarter of 2020, the lockdown process caused less disruption to the broader economy, although it is speculated that this triggered some medium-term sectoral damage.”

SACCI sees the vaccination process as playing an important positive role in re-igniting the economy, with more space for recalibrating the management of government, but also refocusing the private sector and local and foreign investors into investing in an economy with inherent potential.

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