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The SACCI Business Confidence Index (BCI) for October 2012 was released today at the SACCI Offices in Rosebank, Johannesburg.

The business mood remained relatively depressed in October 2012 but edged up marginally despite the unfavourable economic climate.  The BCI improved by a meagre 0.3 index points from 91.7 in September 2012 to 92.0 in October 2012 and, although not convincing, the October number has at least contained the deterioration in the business confidence index.  The BCI in October 2012 was 5.5 points below its level in October last year but was better than the September 2012 year-on-year performance which reflected a 6.7 point difference.

The mixed impact of the monthly changes of the BCI sub-indices in September were followed by more (seven compared to three) improvements in October 2012.  Only four changes were negative on a monthly basis compared to six in September 2012.  Both the financial and real economic sub-indices performed better in October 2012 than in September 2012. 

Business was broadly satisfied with the Medium-Term Budget Policy Statement (MTBPS) presented by the Minister of Finance.  To enhance business confidence, it is cardinal that delivery on the MTBPS framework prioritises those aspects which are key to economic growth.  Despite the MTBPS, the outlook for the South African economy remains uncertain and will respond to critical policy decisions that will be taken by the governing party at its leadership conference in December 2012. 

SACCI is concerned that the estimated deficit of the current account of the BoP may reach +7% of GDP in 2012 if current export and import trends continue.  It is of concern that the lack of competitiveness with the rest of the world appears to be a mounting problem.  Foreign trade plays an important part in the business mood and reflects the openness of the RSA economy.

Although the rand was stable during the first nine months of 2012 with the effective exchange rate of the rand deteriorating by a small margin, it is concerning that between September and October 2012 the rand depreciated notably against the US dollar and the euro.  This has medium to long term implications for the domestic inflation and interest rate.  

For a full background to this month’s SACCI BCI see the Economic Commentary in the BCI report on www.sacci.org.za.