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S. Africa's business confidence index continues to decline
Last Updated: 2018-09-12 11:22 | Xinhua
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The business confidence in the country continues to declines in the last three quarters of 2018, said Rand Merchant bank (RMB) on Tuesday.

The bank released the RMB/Bureau of Economic Research (BER) business confidence for the third quarter in 2018 on Tuesday in Johannesburg. The report showed that the business confidence index (BCI) and activity continues to weaken. At the first quarter of the year, the index was 45 before falling to 39 in the second quarter and 38 in the third one.

"The underlying South African business landscape continues to weaken, with more sectors showing signs of strain. While confidence hasn't (yet) fallen to the levels observed during the previous (and severe) recession of 2009, we remain deeply concerned about the prospects," said Ettienne Le Roux, chief economist at RMB.

A total of 1,700 business people in the five sectors which are manufacturing, wholesale, retail, new vehicle trade and building and construction were surveyed during the month ending September 6, 2018. The RMB stated that in the third quarter there were some fears of inflation and high interest rates.

They also stated that the rand fell to over R15/U.S. dollar because of trade tensions between the U.S. and Turkey. The report also observed that there is a renewed disillusionment about the broad policy direction the country is taking.

"It goes without saying, the political and policy factors weighing down on business confidence (such as the government's land reform plans) must be resolved to produce impetus for an increase in sentiment. This is especially the case now that global headwinds are mounting, domestic public finances are stretched and monetary policy is facing rising inflation risks," Le Roux said.

Le Roux also said, "Given the historically tight relationship between the RMB/BER BCI and real GDP growth, the renewed downward trend in confidence is disconcerting. On past form, it points to economic growth weakening even further after already slowing from 1.4 percent year-on-year in the first quarter to 0.5 percent in the second quarter."

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