The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) for February showed that the improvement in business confidence was sustained, with the index reaching 98.9 points – 3.4 index points higher than in February 2017.

“The direction of various business climate indicators is still positive although the pace of improvement has slowed from the exceptional positive mood in January, when the index reached 99.7, Sacci said in a release issued on Wednesday. 

It added that, although the present business confidence contains substantial positive sentiment, investment decisions will soon have to become reality to create sustainable higher economic growth and employment prospects.

The BCI has remained above 95 since November 2017.

“Six of the thirteen subindices that comprise the BCI, had a negative monthly impact in February – declining from exceptional improved levels in January. The year-on-year improvement in the BCI in February was the result of ten of thirteen subindices that improved and two that were unchanged on a year ago.”

The largest year-on-year positive contributions to the business climate were from lower inflation, increased merchandise import volumes, improved new-vehicle sales and increased manufacturing output.

The high real cost of financing and less merchandise export volumes had a negative year-on-year effect on the BCI.

Sacci pointed out that President Cyril Ramaphosa had, during the World Economic Forum meeting, in Davos, in January, promoted South Africa as an investment destination with a secure and stable investment environment.

“Many of the policy proposals should thus be targeting concerns of international credit ratings agencies, as well as those of potential local and international investors.

“The 2018/19 budget was an effort to manage a desperate situation and a resolve to turn the economy away from the fiscal cliff and prevent a worse outcome that was structurally pending and a possible downgrade to below investment status,” Sacci stated.

It added that the lower inflation and the stronger rand exchange rate, together with a budget indicating government’s resolve to turn back from the fiscal cliff could accommodate an easier monetary policy stance that should further enhance the country’s economic performance over the medium term.

Greater economic policy consistency and predictability should add to the present improved business confidence level.