On March 17, 2023, a customer was spotted comparing prices at a Pick and Pay shop in East London, South Africa. The image was captured by REUTERS/Siphiwe Sibeko/File Photo.
In recent news, South Africa’s business confidence slipped in the fourth quarter of 2022, mainly due to weak local demand for vehicles and high borrowing costs. According to a report by Reuters on November 21, the business confidence index fell to 31 points in the fourth quarter, from 33 points in the previous three months. This survey was conducted by the Rand Merchant Bank (RMB) and compiled by the Bureau for Economic Research.
The decline in confidence was also felt among new vehicle dealers, who saw their confidence drop by 24 points. This marked the lowest level since the second quarter of 2020 when South Africa imposed its strictest COVID-19 lockdown.
Despite this decline, there were some bright spots for certain sectors. Confidence among respondents in the retail sector jumped by 15 points. However, non-durable retailers reported a steep decline in volumes due to price increases late in the year.
Isaah Mhlanga, chief economist and head of research at RMB explained that structural supply constraints around infrastructure and electricity remain a key challenge to operating in South Africa’s business environment. However, he also noted that underlying demand weakness contributed to the decline in the RMB/BER Business Confidence Index.