Business Confidence Index (BCI) for March 2020
8 April 2020
The Business Confidence Index (BCI) of SACCI decreased by 2.8 index points in March 2020 to 89.9 following on an uptick of 0.5 index points in February 2020. The BCI of March 2020 was 1.9 index points lower than the 91.8 of March 2019. The March decline is the sharpest month-on-month decrease since the 2.9 index points of the BCI in August 2019.
The exogenous Covid-19 pandemic shock and the economic impact thereof came on top of a tight business climate and a subdued South African economy. The economic effect of the Covid-19 on trading partners and lately on the South African economy became more evident and pronounced towards the end of March 2020. Except for new vehicle sales and energy supply, the effect of Covid-19 was not yet reflected in the available data for the real economy. The credit downgrade to junk status by Moody’s on 27 March 2020 did not have a profound effect on the March BCI as this came at the tail end of March.
Exceptional negative monthly impacts on the BCI came from a notable lower number of new vehicle sales, the weaker exchange rate of the rand against the major trading currencies, and lower share prices – all mainly due to global uncertainty and unpredictability caused by Covid-19. Lower interest rates, improved terms of trade, and the decline in the US-dollar crude oil price somewhat comforted a nervous business community.
An important aspect of managing the virus as a health threat is to flatten the curve of infections and mitigate the spread of the virus so that the health system such as medical facilities and hospitals are not overwhelmed and are able to cope when infections are peaking.