South African Business Confidence Hits Six-Month High in October

(Bloomberg) -- South Africa’s economy may be showing signs of a recovery after business confidence rose to the highest level in six months in October -- a month in which President Cyril Ramaphosa hosted an inaugural investment conference and named a new finance minister.

The index measuring business sentiment climbed to 95.8 from 93.3 in September, the Johannesburg-based South African Chamber of Commerce and Industry said in an emailed statement Wednesday. The gauge was at 92.9 a year ago.

Key Insights

• The index is rebounding after the initial boost in confidence following Ramaphosa taking over the presidency in February wore off as economic realities, and a recession, set in.
• Six of the 13 sub-indexes improved between September and October. Six remained unchanged and one -- share prices -- deteriorated.
• Factors that affected the economy in October included the appointment of Tito Mboweni, who is known to the market, as finance minister. Mboweni’s mid-term budget that painted a bleak picture of the nation’s debt and deficit path and Moody’s Investors Service said the weaker fiscal outlook is credit negative, but Ramaphosa’s economic stimulus plans and investment conference after the budget helped to boost sentiment.
• “It appears that the initial euphoria in the business environment at the start of 2018 has now made way for a more rational assessment of the business climate,” the business chamber said. “The adverse economic and business environment is being addressed by action, and could be more sustainable and enduring due to increased policy certainty.”

--With assistance from Prinesha Naidoo.

To contact the reporter on this story: Rene Vollgraaff in Johannesburg at rvollgraaff@bloomberg.net

To contact the editor responsible for this story: Gordon Bell at gbell16@bloomberg.net

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