Business confidence plunged to a 12-year low in July, the South African Chamber of Commerce and Industry (Sacci) reported on Tuesday, as it expressed concern over the global economic slowdown and the widespread downwards revision of South Africa’s growth outlook.

The Sacci Business Confidence Index (BCI) declined by four index points to 90.9 in July, after bouncing back by 2.1 points from the 92.8 in May to 94.9 in June. The July reading is down more than eight points on a year ago.

Sacci stated that the latest move in the BCI indicated that business confidence remained highly fragile and unpredictable.

“The short-term monthly improvements in June 2012 were to a large extent reversed in July 2012 with four of the seven sub-indices for the real economy being less favourable than in June. Where eight of the thirteen sub-indices of the BCI were positive on a monthly basis in June, only three sub-indices were positive in July 2012 with four indices being neutral. The majority of the sub-indices in the financial environment were neutral while the sub-indices in the real economy were largely negative on a month-on-month basis,” the index stated.

On a yearly basis, seven of the thirteen sub-indices improved in July 2012 and one remained unchanged. This is better than in June 2012 when five sub-indices made a positive contribution to the BCI.

Sacci said that the growth slowdown globally and locally would impact on trade and the current account of the balance of payments. “Given the uncertain outlook for international trade, a growing trade deficit may have further adverse economic consequences. Foreign trade remains a key contributor in supporting and nurturing local business confidence,” it concluded.