Business confidence: depressed as Agoa benefits seen at risk

The RMB/BER business confidence index (BCI) reading remained in depressed, at 45 (with 50 the neutral mark). The majority of businesses (55%) remained dissatisfied with conditions, and four out of five components saw confidence fall.

Building contractors’ (45 from 51), retailers’ (50 from 54), manufacturers’ (34 from 36) and wholesalers’ (42 from 60) sentiment all fell, a broad-based decline as sentiment remained poor on the whole, with 50 the neutral mark.

Business confidence itself is determined by the current reading of the quarter it’s in, particularly on operating conditions and profitability. Realised business conditions turned more negative, dropping to -17 from -3.

The business climate deteriorated tying in with weak GDP growth, with only the Western Cape recording positive sentiment, although a drop to 52 from 55. Gauteng fell to 40 from 46, KZN lifted from 40 to 44, but remained in negative territory.

The survey took place from 5th to 24th February. With the new Trump Administration’s executive order against SA, uncertainty over the global and SA outlook increased, as US-SA political relations have soured.

The BER noted “these concerns featured in some of the comments from survey respondents, with references to worries about the impact of the continuation of AGOA.”

“The duty-free access to the US provided by AGOA has benefited a number of sectors, particularly South Africa’s automobile industry. “Losing AGOA … could cost tens of thousands of jobs and dent the government’s economic growth strategy.”

The US’s total goods trade with South Africa was US$20.5 billion in 2024, with imports in 2024 at US$14.7 billion, up 4.9 percent ($679.4 million) from 2023. The duty-free access to the US provided by AGOA has benefited a number of sectors.

The forward-looking index of six months out, expected business conditions, again became more positive, with the reading at 7, up from 6 in Q4.24, 3 in Q3.24 and -17 in Q2.24, but not a good predictor of Q1.25.