After the finance minister debacle in December, unstable finance markets and an expect US interest rate hike, it is perhaps no surprise that the South African Business Confidence Index (BCI) fell in December. However, the 79.6 level (down from 82.7 in November) is the lowest it has been in 23 years, according to Reuters.
The South African Chamber of Commerce responded in a statement saying, “The passive performance of the South African economy and its effects on the business mood was complicated by the changing of the guard at the Treasury when it was least desirable.”
"More negative outcomes from the credit rating agencies became reality when the expected hike in US interest rates was announced with the predictable rational reaction from the financial markets and economic commentators."
When President Jacob Zuma sacked Nhlanhla Nene on December 10, the financial markets plummeted almost 20%, exacerbating an already shaky economy increasing fears that the country’s credit rating is at risk.
Reuters goes on to state, “the U.S. central bank's policy-setting committee raised the range of its benchmark interest rate by a quarter of a percentage point to between 0.25% and 0.50%, ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs.”
By Jenni McCann