South African business confidence fell in the fourth quarter with new-vehicle dealers' confidence reaching its lowest level since the onset of the coronavirus pandemic, primarily due to subdued demand.
A quarterly business confidence index, jointly compiled by FirstRand Ltd.'s Rand Merchant Bank unit and Stellenbosch University's Bureau for Economic Research revealed the business confidence index fell to 31 points in the fourth quarter, from 33 points in the previous three months.According to Reuters, confidence among new vehicle dealers, who have been reporting very high inventory levels, dropped 24 points – the lowest level since the second quarter of 2020, when South Africa imposed its strictest COVID-19 lockdown.
Increased borrowing costs in Africa's third-largest economy have restrained consumer spending, and businesses are grappling with challenges in passing on higher input costs to buyers.Survey respondents also noted logistical challenges, including harbour delays, navigating potholes, and difficulties in receiving timely payments for delivered goods.
However, the survey revealed that although cost pressures have slightly eased, non-durable retailers experienced a substantial decline in volumes due to recent price increases.
"Structural supply constraints around infrastructure and electricity remain a key challenge to operating in the South African business environment. However, the decline in the RMB/BER Business Confidence Index also reflects underlying demand weakness," said Isaah Mhlanga, chief economist and head of research at RMB.
Source of the article: Business Insider Africa
