Business confidence slumps to worst level on record

South African business confidence slumped to all-time low in April in a clear sign of the economic impact of of a nationwide lockdown seeking to curb the spread of the coronavirus pandemic.

A sentiment index compiled by the South African Chamber of Commerce and Industry fell to 77.8 from 89.9 the previous month, the business group said in a statement sent by text message on Thursday. That’s the lowest since the index started in 1985 and even worse than the median estimate of 80 by three economists in a Bloomberg survey.

South Africa implemented one of the world’s most severe lockdowns on 27 March. For five weeks, almost all activity except essential services were shut and most citizens were allowed to leave their homes only to buy food, seek medical care and collect welfare grants. The restrictions were eased from maximum disease-alert level 5 to a national level 4 on 1 May, allowing the phased reopening of some businesses and industries, subject to strict precautions.

Business for South Africa, whose members include Sacci, Business Unity South Africa and Business Leadership South Africa, has urged the government to accelerate its phased approach to restarting the economy.

GDP could contract by as much as 16.1% this year and more than seven million jobs could be lost, depending on how long it takes to contain the virus, national treasury estimates show.

“It remains imperative that the economic performance recovers rapidly after the effects of the lockdown have eased,” Sacci said.

The lockdown compounds South Africa’s challenges, which include recessionary economic conditions, “an over-compromised fiscal position” and a full house of junk credit ratings, the group said. “Addressing poverty, inequality and unemployment will become even more complex and problematic as much attention at present is diverted to managing the health threat of Covid-19 and preventing the economy sliding into more difficulty over the medium term.”  — Reported by Prinesha Naidoo, (c) 2020 Bloomberg LP