The South African economy has recorded its fair share in business confidence declines since the 2008 market global crash. Recently, in the 4th Quarter of 2016, the RMB/BER Business Confidence Index declined to 38 from 42 points. This would be equal to levels last seen in the 1970’s and 2010’s.
The latest Global Economic Conditions Survey from ACCA (the Association of Chartered Certified Accountants) and the IMA (the Institute of Management Accountants) point to a similar global business confidence drop in Q4. The findings of the survey highlight businesses and economic forecaster’s sentiment towards 2017 and a new age of uncertainty.
Fall in Government investment; changes in political landscapes and economic isolation are all contributing factors to the decline. The survey of over 4,500 finance professionals and business leaders worldwide has found that while the economic outlook has improved slightly in the US and China over the last quarter, the Eurozone has hit its lowest confidence levels since 2012. In South Africa, business confidence levies are lower than last seen post-2008.
44% of respondents expressed concern over falling income due to low levels of government expenditure, with another 43% reporting worsening business confidence.
Across the Eurozone, the resignation of Italian Prime Minister Matteo Renzi in December 2016, combined with a series of upcoming national elections, has led to a downbeat mood while UK business confidence fell sharply ahead of Brexit negotiations.
“Current political uncertainty is clearly having an impact on global business confidence. In the US the Trans-Pacific Partnership is unlikely to be ratified while likely restrictions on trade with key markets including China and Mexico are also major factors here. In Europe, uncertainty over the outcome of elections in the Netherlands, France and Germany – which could lead to major policy shifts for regional trade and the future direction of the Eurozone – all contribute to a gloomy outlook going into 2017.” – findings Faye Chua, Head of Business Insights at ACCA
Despite this and the slowdown in manufacturing worldwide, the global economy may be on course for growth in 2017, supported significantly by China’s growing response to its economic stimulus programme and the US maintaining a partial recovery.
In South Africa, there is an overall consensus that the Rands strength could beat 2015 levels. A stronger Rand equates to economic stabilisation, steady inflation, and stronger GDP figures. What South African economists are now looking towards is the level of uncertainty brought on by rapidly changing domestic and international economies, politics and trade figures. However, the State of the National Address will give clearer guidance locally to the year ahead and market analysts can have more concrete views on how we emerge on international trade pacts.
To view the survey visit http://bit.ly/2jtIsxi
Fieldwork for the Q4 2016 GECS took place between 24th November and 13th December 2016 and attracted 4,551 responses from ACCA and IMA members around the world, including more than 350 CFOs.