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South Africa’s Economic Outlook Remains Uncertain


South Africa flag
South African flag

Business confidence remained stable in South Africa, but the economic outlook was uncertain, Rand Merchant Bank (RMB) and the Bureau for Economic Research (BER) said on Wednesday.

The outlook for South Africa’s domestic economy had deteriorated in recent months as global economic conditions worsened.

The Eurozone debt crisis continues to grind on. Yesterday, the Eurozone finance ministers, the IMF and the European Central Bank (ECB), failed to reach an agreement after nearly 12 hours of discussions. Greece was expecting a deal to be struck on the €31.5 billion () bail out money for it.

Dennis Dykes, a senior economist at Nedbank, said in South Africa higher administered prices will weigh on household disposable income, while the fragile global environment and slower household consumption will discourage private sector investment.

“Supply disruptions in the mining sector and weak global manufacturing activity indicate that export performance will remain poor for the foreseeable future,” Dykes said.

In South Africa the RMB/BER Business Confidence Index (BCI) declined by one point to 46 in the fourth quarter.

“This means that slightly more than half of the respondents remain downbeat about prevailing business conditions in the country,” the organisations said in a statement.

“The good news is that sentiment improved in four of the five sectors making up the composite index.” New motor vehicle trade was the exception, with confidence falling by 24 index points.

This was partly the result of seasonal factors, and fully offset the increases, of varying degrees, in the other sectors. The business mood among manufacturers improved slightly further, with the index climbing by five points to 38.

“The fact that it did not, points to an important countervailing factor: domestic sales volumes turned out stronger during the fourth quarter than most respondents had initially anticipated, which also more than made up for weaker exports.”


By; Mzwandile Jacks

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