On a quarterly basis Rand Merchant Bank and the University of Stellenbosch’s Bureau for Economic Research release the business confidence index. This index presents the results of business executives’ rating of current business conditions, together with their expectations in the short- to medium-term.
This information has over time been shown to be extremely reliable, based on the historical high level of correlation between this index and the formal statistics. From a layman’s perspective, when business confidence increases, we expect to see improved short- to medium-term economic conditions, whereas a decrease in confidence normally points to a more negative expectation.
The latest business confidence index was released last week and reflected a fall of three points to 28 in the first quarter of 2019. As reported in the national press, the results indicate that more than 70% of business people are dissatisfied with current conditions, and economic sentiment has reduced in four of the five business sectors that form part of the survey.
This is truly not very positive. The index has a scale of 0 to 100, with the highest recorded result being 92 in the 3rd quarter of 1980, and an average of approximately 44 for the recorded period of 1975 to 2019. The current result is only slightly higher than the lows reached in the 2nd quarter of 2017, eclipsed only by that same low of 27 which was reached in the 1st quarter of 2009, following the dramatic events of the global financial crisis of late 2007 and 2008.
Real economic growth is required in order to increase employment levels, which leads in turn to an increase in general spending power, which again, in turn, boosts the economy. If business leaders are saying that they are less confident of real growth than they have been in many years, then even the currently predicted 2% growth in the economy for the current year appears to be at risk.
Doom and gloom aside, at times like this the “glass half full person” needs to keep the positives in life at the forefront of his/her daily existence.
We live in a country that has experienced extreme highs and terrible lows throughout our interesting history. Those of us who are, however, privileged enough to live and work in Hermanus and the surrounding towns should celebrate that which is good in our lives – not ignoring the problems, but staying positive that they will be resolved over time.
Notwithstanding the high capital cost of owning your own home, the region has a large and expanding rental property base that allows those who do not wish to own their own properties to nonetheless experience the joy of living here. On the ‘nature’ front, the Hermanus cliff paths are an absolute joy to experience and what better way can there be of ensuring that those 10 000 steps a day are achieved. The region’s beaches are accessible, clean, and varied enough to cater for any coastal-based activities. The modern malls and personalised speciality shops work side by side to provide any required shopping experience. The Hermanus CBD is reminiscent of a bygone era, with the correct steps being taken to ensure that CBD decay does not occur.
Yes, by developed market comparisons, public transport (or the lack thereof) is a significant negative, to say nothing of the lack of dedicated cycle lanes and provision for non-motorised transport in general, but it is a relatively short commute to Cape Town International Airport, along a coastal road and through the mountains that can only be described as a truly scenic route.
Staying in the positive vein, it would be remiss not to mention two of the prime assets of our country and our region: the people and the weather. South Africans are by nature full of the joys of life, with a wonderful sense of humour, and a caring attitude that extends beyond the norm. We love to help, we enjoy a good chat, we love our food and drink, and we are passionately proud of our country. We also live in a country where the weather lends itself to enjoying all the natural beauty that abounds, typically for most of the year. The days that the sun does not appear are limited, which is sharply in contrast to other parts of the globe where the sun can go into hibernation for weeks at a time!
Let us all focus on the positive aspects of our lives, as only by emphasising these will we in time overcome the negatives arising from the current economic situation and political climate. I don’t profess to have a crystal ball that can reveal the future, but following the elections in May, the country will again have a president elected by the people, giving him the mandate to firmly place the country on the path to economic growth, with an improvement in business confidence as a result of better economic growth forecasts. And the effect on the residential property market – only positive!
The views expressed above are those of the writer in his personal capacity and may not necessarily reflect the views of Fine & Country as a national and international brand.