Our latest CEO Confidence Index indicates that seventy-five percent of South African CEOs think that the SA economy will dip into a recession over the next 12 months noting that the main contributing factors include loadshedding, increase in fuel prices, inflation, crime and water supply, all of which are having a significant negative impact on their business. Despite all these concerns, CEOs still believe that urgent political and economic reform and investments in renewable energy projects could have a positive impact on the economy.

The Merchantec Capital CEO Confidence Index fell in the second quarter of 2022 with a drop of 9.1 points to  47.9 points amid concerns about the possibility of a recession in the next 12 months. Scores are among the lowest since the COVID-19 pandemic and in the second quarter of 2018, where the CEO’s uncertainties included rising fuel prices and had believed that the election of President Ramaphosa would result in drastic cabinet reshuffles and radical economic policy changes.

Basic Resources saw a  35% decline in confidence to a level of 38 in Q2 2022. The decline in confidence was generally attributed to a decline in deterioration of economic conditions.

Technology showed a drop of 9% in confidence.

Consumer Services obtained the lowest score across all sectors, which saw the largest drop in confidence with a startling 41% loss to a score of 36.36. The decline in mood was caused by a 56% drop in confidence in predictions for industry expansion and a 49% drop in confidence in the existing state of the economy.

Consumer Goods was the most bullish of the sectors showing an increase to a score of 61.11 while the other sectors scored below 60 points.

Financials score dropped to 52 points, representing a 10.85 % reduction.

Industrials had a reduction in confidence, going from a positive score of 54 in the first quarter of 2022 to 47.8 points in the second quarter. The decline in sentiment was caused by a 25.9% decline in confidence in economic conditions, a 10.8% decline in company growth, and an 8.6% decline in confidence in their projected level of investment in company business activities.