The South African business confidence remains low at 45, reflecting pessimism due to concerns over steel plant closures and US relations. Four of five sectors declined, although new vehicle dealers’ confidence improved significantly, boosted by lower interest rates and pension changes.
In the first quarter of 2023, South African business sentiment remained pessimistic, with ongoing concerns over potential steel plant closures and strained diplomatic relations with the United States. The business confidence index, compiled by FirstRand Ltd.’s Rand Merchant Bank in conjunction with Stellenbosch University’s Bureau for Economic Research, held steady at 45, indicating a prevailing sense of gloom among respondents.
The index reveals that a slight majority of surveyed sectors are disheartened by current business conditions. Notably, four out of five sectors experienced declines, although a significant increase of 29 points in confidence among new vehicle dealers provided some relief to the overall figures.
Increased tensions between South Africa and the Trump administration, particularly regarding US aid and trade relations, were cited as primary concerns by those surveyed. Respondents expressed apprehension about the implications of maintaining the African Growth and Opportunity Act, which allows numerous South African products tariff-free entry into the US market.
Participants from the building and manufacturing sectors voiced anxiety over ArcelorMittal South Africa Ltd.’s imminent closure of important steel plants, which is expected to result in approximately 3,500 job losses. Business confidence in the building and manufacturing sectors fell to 45 and 34, down from 51 and 36 respectively.
Conversely, the confidence among new vehicle dealers surged to 52, attributed primarily to declining interest rates and recent alterations in pension legislation permitting individuals to access retirement funds without penalties, fostering optimism within that sector.
In summary, South African businesses continue to navigate a challenging landscape marked by pessimism, primarily driven by fears of steel plant closures and strained international relations. However, the surge in confidence among new vehicle dealers offers a glimmer of hope amidst the prevailing downturn in other sectors. The overall business outlook remains cautious as companies await further developments both domestically and internationally.
Original Source: www.livemint.com
