SACCI: Drop in business confidence during elections

The South African Chamber of Commerce and Industry's business confidence index dipped 5.8 index points in April to 108.9 and then dropped further to 107.8 in May.

This translates to a decline of 6.9 points over the two months.

SACCI said the formation of the new government, given the election results, will largely determine the future course of business confidence.

The first sitting of the National Assembly, during which a new president is elected, will take place on Friday.

Chief Justice Raymond Zondo will administer the swearing-in of new members of the National Assembly and the election of the speaker and president at the first sitting.

SACCI economist Richard Downing said the impact of the elections was felt in April already.

“You could see the effect on the business confidence that it actually declined during April and May. It declined by not less than 6.9% over those two months because of all the talk about where political parties want to go and the uncertainty that came forward in terms of the effect of the elections on the economy.”

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Meanwhile, SACCI said three sub-indices negatively impacted the business climate in May, outweighing the three neutral and eight minor positive effects of the other sub-indices.

Downing also noted the decrease in overseas tourists and the decline in merchandise import volumes, which particularly weighed on the BCI in May.

He said merchandise export volumes and new vehicle sales had the main but modest positive impact on business confidence.

Downing said some political parties considering entering a government of national unity have recognised the importance of the economy.

“Although there might be some parties that look the other way and might be disruptive to a certain extent. What is positive is that there is a realisation not only amongst political parties but also voters to support parties that want to positively contribute to the economy and make it work.”