Business Confidence Drops in South Africa as Businesses Turn Pessimistic

South Africa Business Confidence Declines to Record Low in Q2, 2020

Businesses in South Africa are not optimistic about the economy following the damage done by COVID-19 to Africa’s second-largest economy.

Business confidence dropped from 18 in the first quarter of the year to 5 in the second quarter, according to a report published by the Rand Merchant Bank and Stellenbosch University’s Bureau for Economic Research.

According to the report, this is the lowest ever recorded since the business index started in 1975 and the previous low was 12, recorded in 1985 during the apartheid era.

In the survey conducted on 1,800 business executives between May 13 and June 1, RMB said a reading of 5 indicates “just about every respondent in the second quarter was unsatisfied with the prevailing business conditions.”

Africa’s most industrialised economy plunged into recession in the final quarter of 2019 before COVID-19 and now forecast by the National Treasury to decline by as much as 16.1 percent in 2020.

COVID-19 lockdown and plunged in business activities worsen South Africa’s situation even though the full impacts of COVID-19 have not crystalised.

“Covid-19 has drastically changed the already-weak economic landscape and perhaps, in some cases, permanently,” said Ettienne le Roux, RMB’s chief economist. “We are likely only beginning to fully appreciate the complexity of the economic impacts of this pandemic.”