A recent report by Reuters found that South Africa’s business confidence fell in the fourth quarter of 2022, largely due to weak local demand for vehicles and high borrowing costs. The data from the Rand Merchant Bank (RMB) survey compiled by the Bureau of Economic Research showed that the business confidence index fell to 31 points in the fourth quarter, from 33 points in the previous three months.
This decline in confidence was also reflected among new car dealers, who experienced a 24-point drop, the lowest level since the second quarter of 2020 when South Africa imposed strict lockdown measures due to COVID-19. Despite this challenge, there was a bright spot for retailers who saw a 15-point jump in confidence.
However, cost pressures remain a significant issue for businesses operating in South Africa. Rising borrowing costs have led to higher input costs for many companies, making it difficult for them to pass on these costs to customers. Survey respondents also cited logistical challenges such as delays at ports and dealing with potholes as factors contributing to their struggles.
Despite these challenges, non-durable goods retailers reported a slight easing of cost pressures due to recent price increases. However, they also reported a sharp decline in volumes due to these price increases. The survey highlights that structural supply constraints around infrastructure and electricity remain a key challenge for doing business in South Africa’s third-largest economy.