Invigorating Business Confidence
8 December 2021
The SACCI BCI reached a level of around 96.5 in May/June 2021 – a level last experienced towards the end of 2018. However, first Covid-19 and then the looting mayhem in July 2021 put a brake on the upward momentum and had a negative impact on business and investor confidence. Notwithstanding, the BCI recovered to 94.9 in October 2021 – mainly driven by more social stability and favourable developments with regard to global commodity prices and a more economic and business responsible approach to lockdowns caused by waves of Covid-19 infections.
Although still substantial, less merchandise foreign trade implying both import as well as export volumes dipped on a month-on-month (m/m) and year-on-year (y/y) basis and contributed notably to the decline in the SACCI BCI in November 2021. The BCI declined by 2.1 index points between October and November 2021 to 92.8 and by 0.6 index points between November 2021 and November 2020. The SACCI BCI averaged 94.0 for the first eleven months of 2021 and was 8.2 index points higher than the 85.8 average for the corresponding period in 2020.
Apart from the negative impact referred to above, the main positive contributions on a month-on-month basis came from more new vehicles sold, these improved output by manufacturing and higher share prices on the JSE. On a year-to-year basis the main positive impacts were made by increased equity prices on the JSE, increased real value of building plans passed, and more new vehicles sold.
The present lockdown came from external/foreign sources and was a blow to economies starting to emerge from the devastation of the Covid virus. It is therefore welcomed that the South African government is handling the restrictions with due consideration of the economic, fiscal, business and health implications.
SACCI criticized the manner in which the initial announcement on the Omicron variant was made. The disclosure by South African scientists sparked greater concern and negatively impacted the business climate. These announcements should be made with greater circumspection taking account of broader implications. Hopefully the rushed decisions by other countries on travel restrictions will be tampered as more information on the Omicron variant emerges.
For a full background to this month’s SACCI BCI see the full BCI report on www.sacci.org.za.
Issued by Alan Mukoki, SACCI CEO, 8 December 2021
