SOUTH African business group urged the government to speed up reforms and policy changes to strengthen confidence and boost an economy that was in a recession even before the Covid-19 pandemic hit the country.
The South African Chamber of Commerce and Industry’s business-confidence index rose to 93.4 in November from 92 the previous month, it said in an email. It released both the October and November data on Wednesday. The BCI is still below its average of 102.5 in the decade preceding the latest figures.
The gauge plunged to 70.1 at the height of lockdown restrictions in May, the lowest level since its inception. Limitations on the movement of goods and people helped drag the economy into its longest recession in almost three decades. While gross domestic product returned to annualized growth in the third quarter, output is still down from a year earlier.
“It has become clear that structural reform is necessary,” Sacci said in an emailed statement. “Finding solutions to the health and economic effect of Covid-19 call for expedited credible economic policy changes to enhance economic performance and place economic growth on a new trajectory.”
Before the pandemic, some of the reforms that were called for included allocating new broadband spectrum and changing visa regulations to boost tourism and attract skilled migrants. The virus and lockdowns wrought havoc with already tight government finances, and the National Treasury is now urgently trying to trim the public-sector wage bill to rein in the budget deficit and government debt.
Even though confidence ticked up, the index “still reflects a business climate that is plagued by poor economic performance, recessionary conditions, high unemployment and fiscal unsustainability,” the chamber said, describing general mood among business owners as “fragile.”
South Africa fell deeper into junk territory last month after Moody’s Investors Service and Fitch Ratings lowered the country’s credit ratings on expectations that the country’s fiscal situation will deteriorate further and that GDP will remain below 2019 levels for at least the next two years.
To lift business confidence “to appropriate levels calls for decisive and bold steps to beat the challenges of the fiscal cliff, regain investor confidence, move beyond the junk investment status of credit-rating agencies, and create and improve an economic growth momentum led by the private sector,” Sacci said.