South Africa's economy was at a "tipping point" and could be adversely affected if it was not appropriately managed and if restraint was not exercised in terms of a number of issues, the South African Chamber of Commerce and Industry (Sacci) said on Wednesday.

Reporting on the July results of the Business Confidence Index (BCI), which increased marginally on that of June, Sacci noted those business disruptions, which were caused by strike actions and service delivery protests, contributed to a tense and volatile business environment.

"Such activity will further dampen business and investor confidence and would undermine growth prospects and job opportunities at a vulnerable stage in the business cycle," the chamber said in a statement.

It added that, given the depth of the recession, rising unemployment, and the battle to maintain and protect weak economic activity levels, there were "growing irreconcilable" demands on the economy.

The BCI increased to 83,2 points in July, only 0,1 points higher than June's 83,1 points.

Sacci noted that while the BCI was 4,3 points higher than the 78,9 points registered in March, when the BCI dropped to levels last seen in 2002, July's figures were still at levels last seen in the first half of 2003.

Further, higher export volumes and lower inflation were the only two subindices in July to show positive results, compared with six subindices in June.

The majority of the subindices in July were neutral or negative, with all movements being subdued, said Sacci.

The manufacturing, imports, vehicle sales and rand exchange rate subindices had remained neutral in July, while the liquidations, retail sales, construction of buildings, share prices, private sector borrowings, real financing costs and precious metals price indices were negative.

"Business confidence remains sensitive and each month there are areas in the business environment that shows vulnerability to the prevailing recessionary conditions. From month-to-month, subindices alternately display uncertainty and do not follow a clear path of recovery," the chamber highlighted.

Meanwhile, Sacci stated that South Africa has recently seen improvements in the rand exchange rate, consumer inflation and producer inflation, as well as a lower prime overdraft rate, which would ease the "pains of the recession" and provide the basis for an economic recovery.

The weighted rand against the Euro, the pound and the dollar improved by 20% between October last year and July this year, while consumer inflation declined from a high of 13,6% in August 2008 to 6,9% in June.

Producer price inflation dropped 7,9% year-on-year in June, after it had increased by 20,2% year-on-year by August last year.