On March 17, 2023, a customer was seen comparing prices while shopping at a Pick and Pay shop in East London, South Africa. This image was captured by REUTERS/Siphiwe Sibeko/File Photo.
According to a Reuters report from November 21, 2023, business confidence in South Africa slipped in the fourth quarter due to weak local demand for vehicles as consumer incomes remained under pressure in the face of high borrowing costs. The data showed that the business confidence index fell to 31 points in the fourth quarter from 33 points in the previous three months. This information was part of a survey conducted by the Rand Merchant Bank (RMB) and compiled by the Bureau for Economic Research.
Rising borrowing costs have curtailed consumer spending and made it difficult for businesses to pass on higher input costs to buyers. Respondents on the survey also mentioned logistical challenges such as delays at harbours and potholes which affected their ability to receive timely payments for delivered goods.
Despite these challenges, there was a bright spot among respondents in the retail sector who reported a 15-point jump in confidence due to slightly eased cost pressures from power cuts. Non-durable retailers saw a steep decline in volumes due to price increases of late, according to the survey.
“Structural supply constraints around infrastructure and electricity remain a key challenge to operating in the South African business environment,” said Isaah Mhlanga, chief economist and head of research at RMB. “However, the decline in the RMB/BER Business Confidence Index also reflects underlying demand weakness.”