“There was a swing towards positive territory in June as reflected in the improved BCI level. The SACCI BCI increased by 1.3 points to 83.1 in June 2009 and is 4.2 points higher than the low of 78.9 recorded in March 2009,” said SACCI in a statement on Monday.
According to SACCI, the latest economic data and financial market movements indicate that business is stabilising, while also adding that businesses and consumers remain uncertain and hesitant.
“Although still broadly depressed, a number of economic indicators suggest that the decline of the economy has bottomed out and that some economic activities may even have turned. However the pace of recovery remains tentative and still fragile,” it said.
On the slowdown of imported merchandise and the increase in the volumes of merchandise exported between January and May this year suggests lessening pressure on the current account deficit.
“Not withstanding the positive trend since the beginning of the year, export volumes are still about 30% down on the high export levels reached in September/October 2008,” said SACCI.
It also added that the National Regulator of South Africa (Nersa)'s decision to grant Eskom a tariff increment “will no doubt contribute to higher inflationary expectations and risks.”
“Domestic and foreign demand for South African goods and services is strained and this has negative consequences for the supply side factors of production, namely labour, capital and operating overheads,” said SACCI.
Caution and restraint is required in charting an economic policy path through the economic woes that threaten South Africa.
“The fragility that underpins the promise of stability makes it vulnerable to suffocation if not supported by the appropriate economic policies,” said SACCI.
Article published courtesy of BuaNews
