South African businesses exhibit continued pessimism in Q1, with a business confidence index at 45. Concerns include potential steel plant closures and strained US relations. Only the new vehicle sector saw a rise in confidence, aided by policy changes and lower interest rates.
In the first quarter of the year, South African businesses maintained a pessimistic outlook due to fears regarding imminent steel plant closures and potential loss of preferential US market access amidst deteriorating relations with Washington. The quarterly business confidence index from FirstRand Ltd. and Stellenbosch University remained at 45, indicating that more respondents are pessimistic about current conditions in the country.
Among the five sectors analyzed, four reported declines in confidence levels, although new vehicle dealers experienced a significant increase, offsetting some losses. This surge in the vehicle sector saw a 29-point rise in confidence, reaching a score of 52 due to lower interest rates and favorable changes to pension rules allowing early withdrawal.
The survey reflected concerns about South Africa’s standing under the African Growth and Opportunity Act, affecting the duty-free entry of goods to the US. Respondents from the building and manufacturing sectors expressed particular worry over ArcelorMittal South Africa Ltd.’s decision to shut down key steel mills, which could lead to the elimination of approximately 3,500 jobs.
Confidence levels for building contractors and manufacturing businesses dropped significantly, falling to 45 and 34, respectively. The economic climate remains fragile as various external factors contribute to the overall lack of optimism among South African industries.
The South African business climate is currently fraught with pessimism, as evidenced by the unchanged confidence index at 45. With significant declines in four out of five sectors, concerns regarding steel plant closures and strained US relations are evident. However, new vehicle sales have provided a glimmer of hope, reflecting an overall complex economic picture.
Original Source: www.livemint.com
