The biggest risks for South Africa right now – according to businesses

The momentum in trade conditions that was temporarily interrupted in July 2021 appears to be recovering, albeit at a moderate pace, a new survey conducted by the South African Chamber of Commerce and Industry (Sacci) shows.

The data, which was published on Monday (18 October) shows that sales volumes improved, but remained depressed overall, with new orders declining in September.

“Expectations for sales volumes and new orders were well into positive terrain as the indices measured around 60. Inventories and supplier deliveries remained relatively stable in September and are expected to continue to do so in the next six months,” the Sacci said.

“Owing to turbulence in the trade environment, sales prices were more erratic and recently had declined. However, sales prices were expected to increase at an accelerated pace over the next six months.”

While this stabilising in trade will be welcomed by businesses, the majority of respondents (76%) are expecting input costs to increase notably in the next six months with municipal tariffs and rising fuel prices noted as major contributors to these increases.

Other major issues include:

  • Uncertainty surrounding the Covid lockdowns and the effect on the economy;
  • Respondents are concerned about the slow pace of vaccination, which is seen as detrimental to normalising trade;
  • Concerns around law and order in the country;
  • Concerns around municipal service delivery;
  • The volatility of the rand exchange rate has been reported as complicating cross border trade;
  • Job losses are affecting consumer demand at the retail level.

Fuel price warning

The global energy crisis and rising petrol price is set to be a significant consideration for many businesses in South Africa, with mid-month estimates forecasting another hefty significant hike in November

“A concern for the global and the South Africa economy last week was a further rise in the Brent crude oil price. Brent has averaged $82.5 a barrel so far in October, up from roughly $75 in September,” the Bureau for Economic Research (BER) said in a research note on Monday (18 October)

“The average under-recovery for 95 octane petrol up to 14 October was at 98c/litre, while for diesel it was more significant at R1.42/litre. The implication of a sharp rise in fuel costs in November is for South African headline CPI to accelerate in 2021 Q4,” it said.

Read: Here is the expected petrol price for November