South African business confidence was subdued in October because of an outlook for weak growth in Africa’s biggest economy even as companies welcomed Finance Minister Pravin Gordhan’s mid-term budget.
The business confidence index rose to 92 from 91.7 in September, staying close to the 12-year low of 90.9 recorded in July, the Johannesburg-based South African Chamber of Commerce and Industry said in an e-mailed statement today. The index is compiled from 13 economic indicators, including retail sales, inflation and financial gauges, such as a stock-market index and currency.
“It is cardinal that delivery on the mid-term budget framework prioritizes those aspects which are key to economic growth,” Sacci said. “The outlook for the South African economy remains uncertain and will respond to critical policy decisions that will be taken by the governing party at its leadership conference in December 2012.”
Gordhan on Oct. 25 pledged to freeze spending targets for the first time since 1998 as he seeks to rein in the budget deficit in the wake of downgrades in South Africa’s credit rating by Moody’s Investors Service and Standard & Poor’s. A series of strikes since August cut 0.5 percentage point from gross domestic product this year, Gordhan said yesterday.
The National Treasury lowered the forecast for economic growth this year to 2.5 percent, compared with growth of 3.1 percent in 2011
Sacci said it’s “concerned” that the current account deficit may reach 7 percent of GDP in 2012 if export and import trends continue. The deficit on the current account, the broadest measure of trade in goods and services, widened to 6.4 percent in the second quarter, the highest in almost four years, according to the central bank.