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The reference point or base year of SACCI’s Business Confidence Index (BCI) has been adjusted to 2020 = 100 and gives the SACCI BCI a more recent reference point (base year 2020=100) taking account of up-to-date information and changing trends in the economy and financial markets. With the SACCI BCI at 2020 = 100, the July 2022 BCI recorded 110.3 – it is 1.8 index points up on June 2022 and 6.1 index points up on the low May 2022 level. The BCI for July 2022 was 2.6 index points above the SACCI BCI of July 2021. The average of 108.6 for the 1st half of 2022 was nevertheless 1.5 index points higher than the average for the 2nd half of 2021.

It appears that the July 2022 BCI number indicates the business climate is gradually returning to normality. Increased merchandise export and import volumes, and more new vehicles sold made positive contributions to the business climate in the short-term (month-to-month) in July 2022. Higher inflation, a weaker and volatile rand exchange rate, and higher real interest rates weighed negatively on the business environment.

The BCI for June and July 2022 indicates that the negative medium-term (year-on-year) business sentiment of May 2022 was replaced by positive developments if compared to the same period of last year. It was comforting to note that inward tourism recovered markedly while increased new vehicle sales (despite extremely high fuel prices) point towards medium-term investment. Real credit extension to the private sector was also more readily available notwithstanding higher debt servicing costs. The most negative year-on-year impacts were from the financial environment namely rising inflation, increased real financing costs and a weaker and volatile rand.

The present business climate is notably affected by rising inflation (worldwide) and by distortions of global supply chains and commodity markets. South Africa’s economic situation prevailed with business confidence in a ‘holding’ position at present.   

Issued by SACCI