Business confidence sinks to three-year low

BUSINESS confidence slumped to its lowest level in three years last month, reflecting volatile sentiment in an unpredictable and uncertain climate, the South African Chamber of Commerce said yesterday.

CE Neren Rau criticised the government for its lack of sensitivity to business concerns after news that the chamber’s monthly confidence index fell by 3,8 points to 95,7 — its worst reading since March 2009, when SA was nearing a recession.

"We were surprised as this was a very sharp drop. It speaks to the depth of uncertainty in the business environment," Mr Rau said.

"The government is constantly encouraging business to play a more active role in the economy, particularly to create jobs, but I think there is a lack of appreciation of the depth of unease and uncertainty that business faces now," he said.

Global circumstances were among the factors which worried the business community, Mr Rau said. But he also highlighted a range of domestic issues which were making the private sector nervous.

One was the fact that labour bills proposed by the government had been passed by the Cabinet while they were still being debated at the National Economic Development and Labour Council (Nedlac).

Nedlac is a forum for government, business, labour and community organisations to discuss policy issues which affect their interests.

Mr Rau said a lack of strong leadership in the face of policy debates, like the one on nationalisation, was undermining confidence.

"There is a lot of concern about the future of political leadership — business needs some certainty," he said. A succession battle is looming in the African National Congress ahead of its elective conference at the end of this year.

Mr Rau said the fact that global rating agencies Standard & Poor’s, Moody’s Investors Service and Fitch had all changed their outlooks on SA’s credit rating to negative from stable was also a worry.

Last month half of the 12 components in the chamber’s confidence index were negative and half were neutral. Compared to the same month last year, nine components were negative.

Economic growth is widely expected to slow to 2,8% this year from 3,1% last year, largely due to the effects of a recession in Europe.







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