SA business confidence at lowest since 2017 junk rating

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South African business confidence fell to the lowest level since the country lost its investment-grade credit rating, as political and policy uncertainty continue to weigh on sentiment.

An index tracking SA business confidence declined again in the fourth quarter of the year, according to the latest business confidence index by Rand Merchant Bank and Stellenbosch university's Bureau for Economic Research. 

Confidence is now at the lowest level since the second quarter of 2017, when former president Jacob Zuma’s move to fire Pravin Gordhan as finance minister saw the country’s debt cut to junk by S&P Global Ratings and Fitch Ratings. 

The index declined from a revised 34 points in the third quarter to 31 points. Of the five sectors that together comprise the index, sentiment fell in the motor trade and building, and increased in manufacturing, retail and wholesale trade. 

Ettienne Le Roux, chief economist at RMB, said in a statement that while President Ramaphosa’s "refreshing new focus on public-private-sector partnerships" was welcome, policy issues continue to weight down on business confidence. 

Le Roux said the chief policy issue causing uncertainty was around the state's land reform plans. 

"Unless these are resolved in a more speedily and concrete fashion, private sector fixed investment, and by implication, economic growth will remain disappointingly low. Time is running out as global headwinds are mounting and domestically inflation, as well as policy interest rates, have bottomed” he said. 

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