Q2’24 Business confidence edges up

Business confidence in South Africa showed signs of improvement in the second quarter of 2024, with a 35% increase reported. CNBC Africa's Zanele Morrison sat down with Isaah Mhlanga, Chief Economist and Head of Research at Rand Merchant Bank, to delve into the details of the latest RMBBR report. Mhlanga highlighted the key factors influencing business sentiment in the country, providing insights into different sectors and regions. The survey was conducted from the 9th to the 27th of May, before the elections, which led to a sense of uncertainty among investors. However, the absence of load-shedding during that period had a positive impact on respondents. Among the subsectors, wholesalers' confidence rose significantly to 53%, while building contractors also saw an uptick to 47%, surpassing the long-term average. Retail and manufacturing sectors also showed improvements, although new vehicle dealers experienced a decline in confidence due to factors such as high interest rates and sluggish economic growth. Mhlanga highlighted the challenges facing the economy, noting a contraction in the first quarter of 2024. He emphasized the need for stable economic growth and increased investment to drive job creation and boost income levels. Uncertainty surrounding the elections and slow progress in economic reforms have contributed to a constrained operating environment for businesses, impacting investor confidence. Discussing selling prices, Mhlanga noted varying dynamics across different subsectors, with expectations of moderating inflation. While consumer-facing sectors may benefit from this trend, the overall impact depends on specific industry dynamics. Regions such as KwaZulu-Natal and the Western Cape have shown solid growth, particularly in the construction sector. Mhlanga attributed this growth to factors like internal migration and increased demand for housing in these provinces. In conclusion, Mhlanga emphasized the importance of improving the operating environment for businesses to stimulate investment and job creation. Addressing uncertainties and implementing necessary economic reforms are crucial steps towards achieving sustainable growth and reducing the country's high unemployment rate. As South Africa navigates economic challenges and strives for recovery, policymakers and industry stakeholders must work together to create a conducive environment for business growth and innovation. The latest uptick in business confidence signals resilience in the face of adversities, but sustained efforts are essential to drive long-term prosperity and stability in the country.