JOHANNESBURG (Reuters) - South Africa’s business confidence recovered from a seven-month low in June as a recovery in the rand the previous month helped boost export volumes and as imports of merchandise increased, a survey showed on Thursday.
The South African Chamber of Commerce and Industry’s (SACCI) monthly business confidence index (BCI) ticked up to 94.9 in June from 93.2 in May.
Business activity and perceptions in June were soothed by an improved exchange rate, with the rand ZAR=D3 advancing more than 2.5 percent in the month as the currency reaped the benefits of a worldwide search for higher yields.
“The main contribution to the monthly improvement to the BCI in June was made by higher merchandise import and export volumes, the improved rand exchange rate,” SACCI said in a statement.
The rand has since surrendered those gains, dipping back near seven-week lows on Wednesday as proposals by the ruling party to nationalise the central bank and expropriate land raised fears of more anti-market policies.
Confidence has been subdued by political uncertainty following the axing of the finance minister in March and a subsequent double credit downgrade to sub-investment grade, while the economy slipped into technical recession.
“When an economy that is in a recession gets the label of junk status, the stance of the economy becomes even more complicated,” SACCI said.
“If structural economic deficiencies become part of the assessment, the challenges for recuperation become more multifaceted.”
Reporting by Mfuneko Toyana; Editing by Joe Brock