Following the easing of lockdown restrictions imposed by the South African government to check the spread of COVID-19, the country has enjoyed a new boost in business confidence.
According to a quarterly assessment of business confidence in the country, conducted by FirstRand Ltd.’s Rand Merchant Bank unit, it on Wednesday, said business confidence country has increased to 40 from 24. It is the country’s highest since Q2/2018. The index is compiled by Stellenbosch University’s Bureau for Economic Research.
The improvement shown is another proof to the data that suggests the South African economy may be recovering gradually from its low ebb.
The country’s output contracted by an annualized 51% and 2.2 million jobs were lost in the second quarter.
“It only signifies an economy that’s out of intensive care, and not out of high care,” an RMB chief said. “The strong rise in confidence among consumer-facing sectors could easily turn out to be temporary if the ‘kicker’ having come from pent-up demand peters out.”
The confidence boost for businesses may however not be long-lasting due to the overall effects of the pandemic.
South Africa is one of Africa’s worst-hit countries and has been rallying back, following its recession in March. The country has faced two recessions in two years.