Business confidence recovered in the third quarter, pulling back from its worst slump on record in the previous three months, as SA’s economy began opening up in earnest.

The uptick, shown in the latest Rand Merchant Bank (RMB)/BER business confidence index (BCI), released on Wednesday, suggested that the worst of the trough may be behind SA, though there is much ground to recover, according to the bank.

Nevertheless, the jump to 24 index points, from the previous historic low of five in quarter two, still leaves business sentiment in negative terrain, indicating that almost eight out of 10 of the business executives surveyed regard business conditions as unsatisfactory, according to the BCI.

The BCI surveyed 1,800 respondents across five sectors: manufacturers, building contractors, retailers, wholesalers and new-vehicle dealers. The index’s neutral mark is 50, with a reading below that deemed negative.

Sentiment, now at its highest level since the last quarter of 2019, recovered across all five sectors.

The confidence figures came after Stats SA released figures showing that the economy contracted at an annualised rate of 51% in the second quarter, or 16.4% if the data is not annualised.

“While no doubt discouraging, the improved RMB/BER BCI in the third quarter is supportive of these figures representing the worst point for this cycle”, chief economist at RMB Ettienne Le Roux said in a statement.

Though data is still outstanding, said Le Roux, these developments suggest GDP can recover some lost ground, possibly increasing by an annualised rate of 20%-25% in the third quarter.

Though this would be “an encouraging outcome”, it would “still leave SA’s GDP considerably smaller than it was last year”, he said. “The government, in conjunction with the private sector have much work to do to rebuild an economy that just suffered a devastating blow from the coronavirus- induced global as well as local shock.” 

August recovery

The business confidence figures follow the release of consumer confidence figures earlier this week, which revealed that, despite a comeback from record lows in the second quarter, consumers’ confidence remains weak.

Meanwhile, data from the latest BankservAfrica economic transaction index (BETI) for August showed continuing recovery albeit at a slower pace than previous months.

The data from the latest BETI, also suggests that the worst of SA’s decline may be over, according to Mike Schüssler, chief economist at economists.co.shhuaxiu.com.

The BETI measures transactions captured by automated clearing house BankservAfrica including card, ATM and EFT payments, and gives insight into the underlying economic activity.

The second-quarter GDP contraction was predicted in the BETI for June, when a steep downturn was forecast due to the poorly performing economic transactions during the Covid-19 lockdown period and the associated economic restrictions, Schüssler said.

“While the quarter for the measurement of GDP only ends in September, we are convinced that the depressing decline of the economy in the second quarter, the worst in SA’s economic history, is now behind us,” he said.

However, though the economy is likely to have recovered at a very strong pace at the end of the third quarter, returning to the levels seen at the end of 2019 “will not be reached easily”.

“The closer to full recovery the economy gets, the slower the recovery process will be,” said Schüssler. “It will take some time for the economy to return to its levels before lockdown.”

Update: September 9 2020
This article has been updated with information and comment throughout.


Business confidence improved in the third quarter, recovering from its worst slump on record in the previous three months, as lockdown restrictions eased. Business Day TV spoke to RMB economist Siobhan Redford about whether the improvement in sentiment can be sustained.

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