Business confidence creates opportunity for sustained economic recovery

1 March 2000 News

Economic activity is gaining momentum in response to the business confidence level that rapidly improved since June 1999. According to the figures of the Business Confidence Index (BCI) released by the SA Chamber of Business (Sacob), November reached 105,5 points, the highest level recorded since February 1990, maintaining these high levels throughout December 1999 into January 2000, despite the problems posed by Y2K.

The January BCI of 109,9 points was the highest level since it was first published in 1985. The slight increase in headline inflation was the only indicator negatively influencing the BCI, states Sacob.

Other financial indicators remained fairly stable during the holiday period while real indicators underpinned the underlying business confidence level. Manufacturing expectations for the next twelve months, as reflected by SACOB's Manufacturing Survey, were also more positive as the outlook for sales and output increased further. Sixty-four percent of the respondents were positive about the overall prospects for the year ahead, it said.

Conclusions from Sacob is that it is of utmost importance that by removing remaining impediments to the orderly functioning of the economy, the present upbeat business mindset can be enhanced to take advantage beyond the present cyclical upturn in the economy. Clear indications on economic policy will endorse the confidence of business on the way ahead in order to improve and maintain expectations. Attaining a more sustainable economic growth path over the longer term could smooth the volatile cyclical swings that are a characteristic of the South African economy.

A more predictable economic environment will, however, not only contribute to domestic business confidence, but should also improve South Africa's position as a fixed investment destination as judged by international credit rating institutions. Sacob says the formalisation of the International Investment Council further reinforces this possibility.

For further information about Sacob see www.sacob.co.za

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