Business confidence has fallen dramatically in the third quarter ending in September\u201a business advisory firm Grant Thornton said in a statement on Tuesday.<\/p>\n
Confidence levels have fallen by 45 percentage points to -40%\u201a the latest Grant Thornton quarterly tracker research found. The figure for the second quarter ending in June was 5%.<\/p>\n
The data is compiled from the responses of 100 South African business executives asked how optimistic they are about the economy\u2019s outlook for the coming 12 months.<\/p>\n
\u201cChina\u2019s economic slowdown\u201a local exchange rate currency declines\u201a the energy crisis and continued labour and skills issues are just a few of the factors battering the nation\u2019s business outlook for the year ahead\u201a\u201d says Andrew Hannington\u201a CEO of Grant Thornton Johannesburg.<\/p>\n
While \u201cthe same disturbing factors constrain growth prospects \u2026 poor government service delivery concerns are once again highlighted in this quarter\u2019s survey\u201d\u201a the report says.<\/p>\n
\u201cThe only glimmer of hope on our nation\u2019s dismal horizon at the moment is the World Economic Forum\u2019s Global Competitiveness Report for 2015-6 released on 1 October. South Africa improved its ranking by seven places to be placed 49th out of 140 economies worldwide\u201a\u201d Hannington says.<\/p>\n
The report says: \u201cGlobally\u201a the International Business Report (IBR) Q3 survey reveals the extent to which contagion caused by China\u2019s economic slowdown is spreading to businesses around the world. Business confidence and expectations for revenue and exports are down\u201a not just in China\u2019s near neighbours\u201a but in several major economies which rely on the world\u2019s second biggest economy as a major trading partner.<\/p>\n
\u201cIn China\u201a optimism slipped 20 percentage points to net 26% in Q3-2015. And the falls recorded in many of China\u2019s top trading partners were equally as striking: Germany (down 46pp to +46%)\u201a Japan (down 36pp to -28%)\u201a and Australia (down 15pp to 39%) all reported sharp dips in optimism. The total global optimism figure dropped 7 percentage points to net 38% for Q3 2015 (Q2:2015 \u2013 45%).\u201d<\/p>\n
The report quotes the IMF as saying that \u201cfor South Africa \u2018solving the energy crisis is the utmost priority\u2019\u201d\u201a and adds that the country\u2019s \u201cskills mismatch\u201d needs to be addressed.<\/p>\n
\u201cA massive 59% of South African business executives stated that rising energy costs is the greatest constraint to growth\u201a while 50% were constrained by economic uncertainty and 46% by exchange rate fluctuations. Overregulation and red-tape is the nation\u2019s fourth greatest constraint to business expansion with 42% lamenting this factor while a lack of a skilled workforce was affecting 37% of business executives\u201a\u201d says the report.<\/p>\n
As many as two thirds of business executives surveyed are putting off investment decisions as they wait for more stable conditions.<\/p>\n
\u201cThis could mean many companies are sitting on large amounts of cash\u201a looking for more stable times ahead before making investments\u201a\u201d says Hannington. \u201cIt would be better for South Africa if businesses would start investing into the country again\u201a though\u201a because this would stimulate growth and increase jobs \u2013 but political stability would need to prompt that first\u201a I guess!\u201d<\/p>\n
The report says a massive 75% of all business owners surveyed are affected by poor government service delivery.<\/p>\n
\u201cOur local municipalities just cannot seem to get on top of the service delivery issues in South Africa. When basic services are impacting the day-to-day activities within a business\u201a it\u2019s a sign that the real backbone of our infrastructure needs attention\u201a\u201d Hannington says.<\/p>\n
Problems in basic utility services (water and electricity supply) have seriously businesses\u201a and many were concerned by a deteriorating road infrastructure. Strikes were also a cause for concern. \u201cHalf of SA businesses (50%) stated that strikes most certainly affect their business function.\u201d<\/p>\n
\u201cWorldwide economic pressures combined with local issues and political instability do not create content\u201a happy\u201a thriving businesses. South Africa needs to buckle down with a strict action plan to get things going \u2013 we need a major turnaround and we need it now\u201a\u201d Hannington concludes.<\/p>\n
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