South African business confidence dropped to the lowest level in 17 months in October as economic growth slows and the government projects a wider budget deficit.
The business confidence index fell to 97.5 from 98.4 in September, the Johannesburg-based chamber, known as Sacci, said in an e-mailed statement today. The reading was the lowest since May 2010. The index is compiled from 13 economic indicators, including retail sales, inflation and financial gauges, such as the stock index and the currency.
“The decline in October 2011 indicates that the loss of business confidence has been more severe,” Sacci said. “The slow resolution of international public-sector debt problems and low global economic growth contributed to uncertainty in the business environment.”
A debt crisis in Europe is threatening to push the global economy toward another recession as governments on the continent cut budgets to narrow deficits. South African Finance Minister Pravin Gordhan last week reduced the forecast for the country’s economic growth for the next two years. Europe buys about a third of South Africa’s manufactured goods.
Africa’s largest economy will expand 3.1 percent this year, down from a 3.4 estimate made in February, the National Treasury said on Oct. 25. The budget deficit will widen to 5.5 percent in the fiscal year through March from 4.6 percent a year earlier because tax revenue will probably miss the Treasury’s target, it said.
Business confidence “remains very fragile under the present delicate and uncertain global financial conditions,” Sacci said.