Johannesburg – The latest data from Rand Merchant Bank (RMB) and the Bureau for Economic Research (BER) shows that business sentiment in South Africa improved in the second quarter of the year.
The RMB/BER Business Confidence Index (BCI) jumped by 15 to 50 in the quarter under review as the majority of respondents indicated their satisfaction with the improving business conditions.
The data shows that confidence rebounded sharply in the manufacturing, retail trade and motor trade sectors, while sentiment among building contractors and the wholesale trade sector improved only marginally. Ettienne le Roux, chief economist at RMB, said however encouraging the improvement in sentiment is, uncertainties remain.
“Various risks such as the fast-spreading third wave of infections, the danger of additional lockdown restrictions being imposed, Eskom’s electricity grid that looks increasingly unstable and the looming threat of industrial action could easily still knock confidence in the period ahead. Notable too is the fact that the rebound in the BCI thus far has mainly been driven by consumer-sensitive sectors, while confidence in sectors linked to the supply-side of the economy remains distinctly lower – a theme yesterday’s first-quarter GDP release corroborated,” le Roux says.
“In the end, for the current cyclical economic recovery to develop into a durable business-cycle upswing, jobs must be created, and for that to happen, fixed investment must accelerate. To this end, it would help if the government fast-tracks its infrastructure drive, while simultaneously, and speedily, implements overdue business-friendly reforms”.
Statistics South Africa yesterday said the economy grew by 1,1% in the first quarter of the year (January–March), translating into an annualised growth rate of 4,6%.
Johann van Tonder, Economist at Momentum, says the better growth in the first quarter may very well propel economic growth for 2021 beyond 4%.
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