The political broadening of governance has led to the encouragement of expectations in the trade environment, the South African Chamber of Commerce and Industry (Sacci) says.

Although there remain notable economic challenges in providing certain logistical and other public sector services in support of smooth trading processes, a positive outlook for the next six months has propelled trade conditions upward, Sacci's August Trade Conditions Survey shows.

During July, trade prospects benefited, with the Trade Expectations Index (TEI) increasing by 11 index points to 66, as reflected by the July 2024 Sacci Trade Conditions Survey. This level was last recorded at the beginning of 2006.

"Expectations, however, moderated somewhat in August, with the TEI at 62. The July and August surveys nonetheless reflected a more positive outlook for the remainder of 2024 and into 2025," the chamber says.

Prevailing trade conditions, however, remained constrained, it notes.

Despite improvements in June and July, trade conditions lingered in negative territory and weakened slightly in August, with the Trade Activity Index (TAI) at 41, which is below the 50-index-point benchmark.

"While improved economic performance is essential to underpin trade conditions, it may take longer to achieve than simply implementing curative economic decisions," Sacci highlights.

Except for input costs, which remained unchanged from July to August, all other trade components turned negative. This adjustment came after the initial optimism surrounding the formation of a more inclusive government and the prospects of improved economic performance.

"However, the current decline in sales prices, coupled with respondents’ predictions of a further decrease over the next six months, bodes well for lowering inflation.

"This trend could prompt the South African Reserve Bank to ease its monetary stance and lower interest rates, which would, in turn, stimulate additional real demand," the chamber adds.

More stable and predictable electricity supply by both the public and private sectors, along with lower fuel prices over the first eight months of 2024, contributed positively to the trade environment.

The latest GDP data confirms that wholesale and retail trade, as well as hotels and restaurants, experienced tight conditions in the first half of this year, with output declining by 2.5% year-on-year.

During five of the first six months of this year, political uncertainty and bickering were prevalent. After the election, a sense of urgency and responsibility toward the economy emerged among the majority of political parties, with a focus on urgently reviving the economy.

This shift in sentiment has renewed optimism for improved economic performance, Sacci states.

Further, the challenging trade environment also negatively impacted on employment conditions, with only 29% of respondents hiring additional staff in August.

However, 50% of respondents to the survey, which is aligned with expected improvements in trade conditions, indicated they might increase staff appointments within the next six months, Sacci says.