Economy is forecast to shrink by at least six percent in 2020, largely as a result of the global coronavirus pandemic which forced government to enforce a nationwide lockdown
BUSINESS confidence in South Africa plunged to a 35-year low in April, a survey released on Thursday showed, as a nationwide lockdown to contain Covid-19 as well as volatility in global financial markets hurt sentiment.
The South African Chamber of Commerce and Industry’s (Sacci) business confidence index, a composite measure of economic and financial market indicators deemed critical for the operating climate, dropped 12.1 points to 77.8 in April, the lowest since its inception in 1985 and the second sharpest month-on-month on record.
On a year-on-year basis, the index slumped 15.9 points between April 2019 and April 2020.
Sacci said “strikingly negative” monthly impacts on the BCI were caused by the lower volume of merchandise exports, a weaker rand against major trading currencies, less new vehicles sold, mainly due to the lockdown, recent downgrades further into sub-investment grade to South Africa’s credit rating and and a generally subdued economic performance.
On Monday data released by the National Association of Automobile Manufacturers of South Africa showed new vehicle sales, a key economic indicator for the country, tumbled by 98.4 percent to just 574 units in April compared with the same month last year.
The economy is forecast to shrink by at least six percent in 2020, largely as a result of the global coronavirus pandemic which forced the government to enforce a nationwide lockdown from March 27 which has grounded most business activity in Africa’s most industrialised country. A slight easing of lockdown regulations from May 1 has allowed some companies to resume limited operations.
“Apart from health implications, the lockdown had a major effect on economic activity and the business climate,” Sacci said.
“It remains imperative that the economic performance recovers rapidly after the effects of the lockdown has eased. This could provide an opportunity to build a cohesive and more equitable society. The essentials of increased capital formation and the restoration of a business climate conducive to private sector participation and investor confidence over the longer-term remain preconditions for an economy in difficulty.”
– African News Agency (ANA)