Johannesburg, South Africa – 03 September 2013 – South African business confidence declined as accelerating inflation , a weakening currency and labour strikes hurt sentiment in Africa’s largest economy, as indicated by two separate reports.
The South African Chamber of Commerce and Industry’s business confidence index remained close to the lowest level in a decade, dropping to 90.5 in August from 90.7 a month earlier, reports Bloomberg News. In an e-mailed statement today, the chamber said the RMB/BER business confidence index fell 6 points to 42 in the third quarter, which indicates that almost three fifths of respondents aren’t satisfied with prevailing business conditions.
“The continuing lack of economic momentum, on-going labour disruptions of the economy and the slowdown in growth in the Brics countries are important factors affecting business confidence,” the Johannesburg-based chamber said. “It is important that supportive conditions for economic growth and disruptions by militant labour conduct are addressed urgently.”
Mining strikes shaved about 0.5 of a percentage point off economic growth last year, according to the government.
Workers in car-making and construction industries are on strike and as many as 90,000 gold mineworkers may down tools later today to demand higher wages. The rand has lost 18% against the dollar in 2013, the most of 16 major currencies tracked by Bloomberg.
“Sluggish, and volatile, economic growth is probably the best we can hope for in the period ahead,” RMB, a unit of Johannesburg-based FirstRand Limited, said. “Deteriorating confidence coupled with widespread strike action point to growth in all likelihood having fallen back to levels of around 2.5% in the second half of the year.”
While gross domestic product growth accelerated to an annualised 3% in the second quarter from 0.9% in the previous three months, it missed the median estimate of economists in a Bloomberg survey. The Reserve Bank is forecasting growth of 2% this year, which would be the slowest since the recession in 2009. Inflation at 6.3% in July exceeded the central bank’s 3 to 6% target range for the first time in 15 months.
Source: Bloomberg News. For more information, click here.