SACCI Press Release

TOUGH CONDITIONS AHEAD

SACCI today released its Business Confidence Index for December 2008.

After ticking up by 2.5 points to 86.7 in November 2008, the SACCI Business Confidence Index (BCI) recorded its lowest level for 2008 of 83.8 in December 2008.  The SACCI BCI was down to 84.9 in the fourth quarter of 2008 compared to 91.1 in the third quarter of 2008 and 95.8 in the fourth quarter 2007.  The average annual figure for the BCI for 2008 measured 90.7 in 2008, 98.9 in 2007 and 100.8 in 2006.

Seven of the thirteen sub-indices made positive contributions to the BCI in December 2008 – two sub-indices more than in November 2008.  Five sub-indices had a negative impact on the BCI’s movement in December 2008 and one remained unchanged.

The SACCI BCI movements over the last three months of 2008 mirror the volatility and uncertain conditions affecting business confidence. Although the severe decline in the BCI in the last quarter appears to be contained, the BCI may linger on at a relatively low level until the international economic scene returns to normality and the local economy shows signs of recovery.

The following list of economic constraints and circumstances were prominent in 2008 and will continue to be of concern to business in 2009:

·         Constrained household expenditure;

·         Balance of Payments imbalances;

·         Need for continued net financial inflows;

·         Lower inflation and commodity prices;

·         Limited fiscal options available; and

·         Restrained economic activity.

Threats and actions by labour interests in the present sensitive business climate will be counter productive, have unintended consequences and harm business confidence.

Business conditions will remain tight in 2009 and indications are that the global and domestic economies could only start to lift their performance towards the end of 2009.  The pace of improvement might be slower than wished for, but could be more solid and sustainable.

For more information contact:

Mr. Richard Downing              Economist for SACCI             082 822 5566

Mr. Neren Rau                         SACCI CEO                  011 446 3800

Released by the South African Chamber of Commerce and Industry, Johannesburg.

13 January 2009