Business climate in South Africa worsened further last month, as the Business Confidence Index (BCI), produced by the South African Chamber of Commerce and Industry (SACCI), fell to 90.2 points from 90.4 points in May. Compared to June 2012, the index was by 4.7 points lower. The average BCI for the first half of 2013 stood at 91.7, by 4 points lower compared to the same period last year. It was the lowest H1 reading since 1999.
A total of 8 of the index’s 13 sub-indices weakened from May to June, 3 were unchanged and only 2 improved, SACCI said. On a y/y basis, improvements were seen in the sub-indices for manufacturing output, new vehicle sales and construction. The financial environment was uncertain with 3 of the 6 financial sub-indices impacting business activity negatively on a y/y basis.
SACCI said that South Africa’s business confidence was negatively affected by the recent turbulence on the global financial markets caused by worries that the U.S. Federal Reserve would cut back its economic stimulus. The chamber expressed its concern that South Africa and other countries considered to have high balance of payment sensitivities, such as chronic current account deficits and dependence on portfolio capital inflows from abroad, would be hardest hit by financial market turbulence. It added remains concerned about the capacity of the South African economy to deal with potentially higher inflation, global liquidity constraints and stagnancy in a number of sectors.
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