An uneven rebound in sentiment leaves businesses treading carefully

The heartbeat of South Africa’s business sector is steady but it’s not racing. Despite a small rebound in the latest Business Confidence Index (BCI), released by the South African Chamber of Commerce and Industry (Sacci), the broader mood remains one of cautious optimism at best.

South Africans know how to keep going when things get tough. Load shedding, policy uncertainty, and global shocks are all part of the terrain. So when the BCI dipped sharply in April and only inched up again in May, landing at 115.8 it wasn’t entirely unexpected. But it did serve as a reminder: hope alone won’t carry the economy forward.

A pulse check on the economy

April saw business confidence take a hefty knock, with an 8.6-point fall on the BCI. May brought a bit of relief, a 0.9-point rise, but sentiment remains fragile. According to Sacci, the current index is still 8 points higher than it was a year ago. That’s a win on paper, but business leaders and economists warn that it’s not time to celebrate just yet.

Professor Waldo Krugell from North-West University summed it up plainly: “Businesses are more pessimistic about their prospects this year. The loss of momentum is showing in both consumer and investment behaviour.” The message? South Africans are holding their wallets a little tighter and investors are, too.

What’s helping and what’s hurting

Some indicators are flashing green: a stronger rand, rising share prices on the JSE, and the global appetite for gold and platinum. Tourism is on the up, and new car sales are climbing. Inflation is cooling. All of these are good signs, and they’re helping to keep the BCI from plunging further.

But there’s no ignoring the red flags: merchandise export volumes are yo-yoing, the real value of building plans is shrinking, and there’s little sign of sustained momentum.

Most critically, economic growth is crawling. South Africa only posted a 0.8% year-on-year GDP increase in Q1 of 2025, far below what’s needed to make a dent in unemployment or create an inclusive growth story.

The political climate: new unity, old problems

For economist Dawie Roodt, the slight confidence bump reflects relief more than recovery. “Last year’s political noise spooked the market. There’s still a bit of a high from the Government of National Unity,” he said. Add a stronger rand and higher gold prices, and you get a recipe for temporary optimism.

But Roodt and others warn that optimism isn’t enough. “We need higher levels of business confidence before we can talk about much stronger economic growth. Right now, 1% growth is our ceiling,” he added.

Professor Raymond Parsons of the North-West University Business School echoed the caution. “Short-term confidence is encouraging, but unless domestic policy becomes more investment-friendly, we won’t see lasting change,” he said.

What’s next: from sentiment to substance

Sacci itself made it clear: business confidence alone won’t fix South Africa’s economic woes. Policymakers need to dig deeper and act faster. Rebuilding investor trust, attracting both local and international capital, and removing red tape must be at the top of the economic agenda.

With elections behind us and a new political configuration in place, the window for decisive reform may be open — for now. Whether leaders will seize it remains to be seen.

In the meantime, businesses will continue to do what they’ve always done: adapt, survive, and keep a wary eye on what comes next.

The numbers might have ticked up, but the story they tell is clear, South Africa’s business community is not yet convinced that the worst is behind us. There is hope. But there’s also hesitation. And until confidence turns into concrete growth, South Africa’s economic recovery remains a work in progress.

{Source: IOL}

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