Although the Business Confidence Index (BCI) remained “virtually unchanged” at 93.1 index points in December, compared with 92.7 index points the month before, the South African Chamber of Commerce and Industry (Sacci) said on Thursday that the BCI was still 2.1 index points lower than the 95.2 index points recorded in December 2018.

The BCI declined from an average of 95.5 index points in 2018 to an average of 92.6 index points last year and, even though the composite BCI “stood its ground” in December, some of the subindices were “quite inconsistent” during December.

Six of the thirteen subindices of the BCI were unchanged between November and December, while four were positive and three made a negative impact on the BCI in December, Sacci said.

Additionally, despite the impulsive moves in some of the financial subindices during December, the six financial subindices on average remained unchanged. And, of the seven activity subindices, the impact between negative and positive moves in December were slightly positively slanted, the chamber pointed out.

The largest monthly positive impacts on the BCI came from merchandise import volumes, the real value of building plans passed, new-vehicle sales and manufacturing output. The real merchandise exports and energy supply (owing to load-shedding and the oil price), however, had notable negative monthly impacts on the BCI in December, Sacci lamented.

The most positive yearly impacts came from the dollar price of precious metals, new-vehicle sales and lower inflation.

Merchandise import and export volumes, and energy supply had notable negative impacts on the BCI in December 2019 compared with December 2018, Sacci said.

Overall, Sacci said the third quarter of 2019’s data on the South African economy reflects an underperforming economy, where there are indications that the economy’s potential is wavering and now requires “positive corrective steps to direct the economy in an appropriate direction”.

Considering that the subdued world economy also does not facilitate an export-driven recovery, Sacci said that with South Africa’s structural challenges impacting on the country’s global competitiveness, the business climate has remained murky.

The upcoming State of the Nation Address (SoNA), Budget 2020/21, and the evaluation by the credit rating agencies, will provide some direction on the way forward.

“Sensitivities with regard to the fiscal situation, the balance of payments, views expressed in the SoNA, the Budget, and credit ratings, will have a decisive impact on the business climate and the economic performance of South Africa in 2020,” the chamber concluded.