Business confidence in South Africa fell in March from February and was likely to decline further due to the rising political tension, a survey showed on Wednesday.President Jacob Zuma’s decision to fire Finance Minister Pravin Gordhan has rattled markets and led S&P Global Ratings to downgrade South Africa’s foreign currency debt to junk status.
Fitch and Moody’s have also warned of possible consequences, with Fitch saying on Monday it was placing South Africa on review for a downgrade.The South African Chamber of Commerce and Industry’s (Sacci) monthly business confidence index (BCI) fell to 93.8 in March from 95.5 in February.
“Towards the end of March, developments extraneous to the economy abruptly upset the momentum of further improving business confidence,” Sacci said in a statement.
“The March BCI, however, does not yet capture the full impact of uncertainty that was created as these developments commenced when the minister of finance was recalled from an overseas investment roadshow before being relieved of responsibilities on the last day of March.”
The rand has weakened more than 12% since March 27, when Gordhan was called back home from the international investor roadshow.”If the rand continues on these exchange rate levels, the Sacci BCI could therefore shed another 0.6 index points in April 2017,” Sacci said.
