World Economy

South Africa Economy Sinks

South Africa Economy SinksSouth Africa Economy Sinks

The South Africa economy is facing a serious crisis of confidence, with survey after survey indicating the country is heading for the doldrums unless a miracle happens.

A survey by the South African Chamber of Commerce and Industry Tuesday showed business confidence fell 2.3 index points in June to its lowest in more than 16 years, as fundamental weaknesses in the economy weighed on productivity, NewsNow reported.

The business confidence index declined to 84.6 in June from 86.9 in May, falling to its lowest level since January 1999.

“The local economy is finding it difficult to raise its performance to prevent imbalances between demand, needs and output from escalating,” Sacci said.

The survey affirms the findings of others in the past week that have revealed serious concerns about the weak performance of the economy.

South Africa’s purchasing managers’ index fell to 49.2 last month from 50.1 in May, its lowest reading in 11 months, the Standard Bank said.

New vehicle sales in June fell by 4.8% year on year to 50,251 units, data from the Department of Trade and Industry showed.

The consumer confidence survey by FNB/Bureau for Economic Research plunged to the lowest in more than 14 years in the second quarter as power outages, rising unemployment and increasing petrol prices dented sentiment.

Sacci said the effects of power outages and the inflationary impact of substantial increases in electricity prices would hurt the economy.

Eskom last month had a bid to raise prices for a second time this year rejected by the energy regulator, but is likely to seek a double-digit tariff increase next year.