The prospects of growth for the second half of 2017 are looking slim as CEOs suffered a confidence “crisis” in the second quarter of the year.
The latest Merchantec CEO Confidence Index shows that CEO confidence has been shaken by political instability, ratings downgrades, ineffective broad-based black economic empower-ment policies and tax increases.
The index, released on Monday, recorded a 24.75% quarter-on-quarter slump in CEO confidence to a second-quarter score of 38.7% – persisting well below the neutral 50-point mark.
“A number of CEOs have adopted the wait and see approach and are in survival mode; they feel the International Monetary Fund forecast of 1% growth is a bit bold considering the current economic climate,” the index outlined.
The survey found that, overall, expectations for economic growth decreased 40.4%, accompanied by 25.7% and 23.3% decreases in industry growth expectations and the the ability to secure debt or equity respectively.
While CEOs across all six industry sectors believe current economic conditions in South Africa are on the downturn, the basic resources sector was hardest hit, plunging 41.8% to an all-time low of 31.67.
“The decrease in overall confidence was driven by decreases in contributing individual components of the index, mainly a 53.2% decrease in planned levels of investment and a 52.6% decrease in economic conditions,” the index highlighted.
The consumer goods sector had decreased by 20.6%, while the financials sector recorded a decrease in confidence of 23.1% in the second quarter of 2017.
