Business confidence up as SA moves to higher economic growth path
By Ian Macdonald, published 23/06/2005
Business confidence in South Africa has increased in the second quarter of 2005, according to figures released by the Bureau for Economic Research (BER) this week.
The BER/Rand Merchant Bank Business Confidence Index (BCI) rebounded to 82 in the second quarter, up from 79 in the first. Although the index is below the 23-year high reached late last year, business confidence remains high: more than 8 out of every 10 executives participating in the BER surveys rated prevailing business conditions as satisfactory.
Reasons for the increase in business confidence include a reversal in retailer and wholesaler confidence, the weaker rand, and the unexpected interest rate cut. The R33bn investment of Barclays in ABSA lifted investor confidence.
Business confidence has made a decisive break with its structural decline over the 1980s and first half of the 1990s. The BCI increase corresponds with South African economy moving to higher growth path. The BER believes that 2005 will be a year of consolidation at a high level, and that business confidence should move largely sideways this year. So, while the cracking pace of consumer and investment expenditure last year is unlikely to persist, no slump is expected either.