South Africa July business confidence recovers on higher commodity prices, firmer rand

Business confidence in South Africa during the month of July recovered slightly on the back of higher commodity prices, coupled with a stronger domestic currency. Also, improvement in supply of energy led to rise in business sentiment during the period.

The South African business confidence index rose to 96 in July from 95.1 in June, data released by the South African Chamber of Commerce and Industry (Sacci) said Monday. Further, Sacci said that, apart from a stronger exchange rate and improved merchandise export volumes, investor and business confidence had to improve in order to propel the economy to higher activity levels.

The index is based on developments around 13 economic indicators: energy supply, manufacturing, exports, imports, vehicle sales, retail sales, the construction of buildings, inflation, share prices, real private sector borrowing, real financing cost, precious metal prices and the rand exchange rate.

Further, there were marginally fewer impediments in the real business environment in July 2016 compared to June 2016, the organization added.

"South Africa experienced stronger merchandise export trade in June and July 2016, while the rand gained a healthy plus 10 percent on a weighted rand exchange rate against the US dollar, British pound and the euro," Sacci said in a statement.

Meanwhile, International Monetary Fund (IMF) and the South African Reserve Bank had lowered economic growth projections for Africa's most industrialized country. The IMF expects South Africa's economy to grow by 0.1 percent this year, while the central bank cut its 2016 growth forecast to zero.