The South African Chamber of Commerce and Industry (SACCI) has released its May 2025 Business Confidence Index (BCI), showing a modest 0.9-point increase from April, bringing the index to 115.8. Year-on-year, confidence has improved by eight points, reflecting cautious optimism in some sectors despite persistent economic challenges.
Key Drivers of Confidence
The uptick was largely attributed to a stronger rand, higher share prices on the Johannesburg Stock Exchange (JSE), and elevated gold and platinum prices. These factors provided a buffer against weaker economic indicators, helping sustain business sentiment.
However, SACCI noted that declining merchandise imports, reduced tourist arrivals, and lower manufacturing output continued to weigh on overall confidence. Richard Downing, SACCI economist, highlighted that while financial market improvements had supported the index, real economic activity remained sluggish.
Election Impact and Long-Term Concerns
Downing pointed out that May 2024—an election month—had been marked by policy uncertainty, causing volatility in business sentiment. Following the formation of a coalition government, confidence had rebounded, peaking at 125 in February 2025 before moderating.
He emphasized that South Africa’s growth trajectory remains weak, with GDP expansion hovering around 1%. “To achieve higher growth, we need to attract foreign investment, as domestic savings are insufficient to meet capital needs,” Downing stated.
Budget 2025 and Fiscal Policy
When asked about the impact of Budget 2025—which left personal income tax and VAT unchanged but raised fuel and sin taxes—Downing acknowledged short-term stability but warned of long-term fiscal pressures. “Restructuring public finances will be crucial to address South Africa’s debt overhang,” he said.
The Road Ahead
SACCI reiterated that economic growth and investor confidence are vital to reducing unemployment and fostering inclusivity. While the May BCI shows resilience, Downing cautioned that significant challenges remain, particularly in boosting real-sector activity.
As South Africa navigates a complex economic landscape, businesses and policymakers will need to balance short-term stability with long-term structural reforms to sustain recovery.