Word Count: 434
This is for Research purpose only
(Bloomberg) -- South African business confidence slumped to the lowest level since disinvestment from the country over it’s apartheid policies started gaining momentum a quarter century ago.
A sentiment index compiled by the South African Chamber of Commerce and Industry declined to 89.1 last month from 92 in July, according to an emailed statement Wednesday. That’s the lowest level since April 1985, the year the United Nations Security Council called on members to introduce more far-reaching economic measures against in South Africa.
While Africa’s most-industrialized economy dodged a second recession in as many years, it’s stuck in the longest downward cycle since 1945, according to central bank data. Weak economic growth, rising debt and an unemployment rate at 29% continue to vex the country, provoking social tensions and prompting warnings from business groups and analysts that it may be forced to seek assistance from the International Monetary Fund.
South Africa experienced a wave of xenophobic attacks over the past three weeks, which have seen scores of foreign-owned shops looted and burned. While Police Minister Bheki Cele said the primary motive behind the violence is crime, some groups say the actions are partly due to the frustration of people who continue to live in poverty.
“The current state of fiscal deficiencies, social injustices and unemployment necessitates an urgent adjustment in how their impact is viewed, no longer as just economic terms that must be studied and converted into action, but as the likely cause of crime violence, looting and anti-foreigner sentiments that are currently dominating news headlines,” the business chamber said. “It is denting the status of South Africa as a favored investment destination and affecting lives and businesses of ordinary South Africans.”
Business sentiment surged to a two-year high in early 2018 after Cyril Ramaphosa won the leadership of the ruling African National Congress and took over as president of the country, but has since waned as businesses continue to seek real reforms.
Policy uncertainty and legislation that forces bank to write off certain debts, along with plans to introduce prescribed assets for pension funds and a national health insurance system, and unresolved issues around land reform added to the adverse business climate in August, Sacci said.
“The economy is in dire need of implementation of policies to achieve economic growth and job creation,” the chamber said.
A quarterly business confidence index compiled by FirstRand Ltd.’s Rand Merchant Bank unit and Stellenbosch University’s Bureau for Economic Research, is due later on Wednesday. It’s forecast to remain unchanged at 28 for the three months through September, according to the median estimate of economists in a Bloomberg survey.
To contact the reporter on this story: Prinesha Naidoo in Johannesburg at firstname.lastname@example.org
To contact the editors responsible for this story: Rene Vollgraaff at email@example.com, Paul Richardson
©2019 Bloomberg L.P.