2012: Set for strong recovery

2012-02-09 00:00

THE collective story of business in 2012 is likely to be a tale of pain followed by gain.

The CEO of the South African Chamber of Commerce & Industry (Sacci), Neren Rau, told The Witness yesterday that a stronger economic recovery could be in the offing toward the end of 2012.

But this would depend on whether local businesses, particularly manufacturers, have diversified their client base away from vulnerable European economies, which appear to be headed for a recession.

The Sacci Business Confidence Index (BCI) for January 2012 declined to 97,1 points from 99,1 points in December 2011. The index declined by almost six percent year on year, dragged down by the poor performance of the real economy.

Sectors in the real economy that performed particularly poorly were retail sales, imports, exports and utility services. Several financial indicators also underperformed in January, but to a lesser extent when compared with the real economy. The poor inflation data were mainly to blame.

“While the BCI is particularly low, it does conform with our view that the first six months of the year will be tough for business,” said Rau.

“There have been some improvements, but they have not been major. The policy environment is still uncertain … and we now look to the state of the nation address and the national budget speech for some direction.”

He predicted that today’s state of the nation address would include pronouncements on enterprise support, especially for small and medium enterprises, as well as support for the general business environment.

Rau said the manufacturing sector was expected to signal a stronger broad-based recovery. Improvements in this sector were then expected to filter through the rest of the economy, via exports and imports.

Another key factor would be the performance of local government and utilities, particularly the provision of basic infrastructure to businesses.

— Witness Reporter.

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