Business confidence, which had shown considerable volatility in 2009, would likely reach a higher average this year, after reaching a seven-year low in 2009, the South African Chamber of Commerce and Industry (Sacci) said on Thursday.

Reporting on the results of its Business Confidence Index for December, which fell by 0,6% month-on-month, Sacci noted that the index seemed to have lost momentum since achieving its highest level for 2009 of 85,5 points in September.

The index had been moving laterally since and recorded an average of 82,8 points for the full year, the lowest annual figure since 2002.

Only two subindices, namely the rand exchange rate and consumer inflation, had made a positive impact on business confidence during the year, while 11 subindices had, on average, negatively impacted on business confidence during the year.

Sacci said that the volatility of business confidence had followed on the difficulties experienced in the local economy in finding a comfortable recovery.

Further, it highlighted that, despite the economy emerging from its first recession in 17 years in the third quarter of 2009, a number of consequences to the recession remained.

"Although the markets have factored in a more brisk recovery, both the global and local economies struggle to recover from the impact that the substantial disruption of the international financial system had on the real economy broadly and on global trade in particular," the chamber stated.

It added that the public sector management challenges and looming administrative price adjustments, locally, contributed to uncertainty in the economy and in business confidence.

Nevertheless, Sacci expressed confidence that the economy would grow by 2% or more this year.

"Public sector activities may remain countercyclical for most of 2010 with administrative prices under strong surveillance. With monetary policy remaining at its current neutral/positive stance, a gradual recovery in other economic indicators and the prospect of a successful [2010 FIFA] soccer World Cup, business confidence is likely to seek a higher average for 2010 than in 2009," the chamber noted.