South Africa’s business confidence hit a record low in the second quarter, a survey showed on Wednesday, as a coronavirus-led lockdown stalled an economy that was reeling from a recession even before the COVID-19 pandemic.
The Rand Merchant Bank (RMB) business confidence index (BCI), compiled by the Bureau for Economic Research, was at 5 points for the second quarter, the lowest level since the first survey in 1975 and down from 18 points for the first quarter.
Africa’s most industrialised economy, which entered its second recession in two years in 2019, has been largely shut down since late March, when the government imposed severe restrictions to stem the spread of the novel coronavirus.
The country began phased easing of the lockdown in May.
“COVID-19 has drastically changed the already-weak economic landscape and perhaps, in some cases, permanently,” RMB chief economist Ettienne le Roux said.
“We are likely only beginning to fully appreciate the complexity of the economic impacts of this pandemic.”
Firms will likely continue to face an income squeeze as costs rise, while weak demand weighs on prices, and many will have to find new ways of doing business, according to the survey.
It also said that the BCI plunge to five was consistent with a “never seen before” contraction in economic growth.
South Africa’s central bank expects the economy to shrink 7% this year, but economists expect an even deeper recession as well as deep job losses.
The survey showed that business confidence declined across all sectors, but retail confidence held up relative to the other sectors because of the sale of essential goods.