According to data presented on Tuesday, business confidence in South Africa declined during the fourth quarter, primarily due to lower demand for vehicles in the local market. This trend was driven by continued pressure on consumer incomes, as well as high borrowing costs.
In the fourth quarter, findings from a survey conducted by the Rand Merchant Bank (RMB) and meticulously compiled by the Bureau for Economic Research unveiled a downturn in the business confidence index. The index witnessed a descent from 33 points in the preceding three months to 31 points during this period.
New vehicle dealers, grappling with notably elevated inventory levels, experienced a substantial 24-point decline in confidence. This marks the lowest level since the second quarter of 2020, coinciding with South Africa’s imposition of its most stringent COVID-19 lockdown measures.
Escalating borrowing costs in Africa’s third-largest economy have constrained consumer spending, and businesses are encountering challenges in transferring elevated input costs to consumers.
Contrastingly, a positive development emerged with a notable 15-point surge in confidence reported by respondents in the retail sector. This sector, contending with formidable operating costs stemming from power cuts, experienced a noteworthy improvement in sentiment.