Economic sentiment in South Africa remains subdued

JOHANNESBURG, 8 August 2017 YPO, the premier chief executive leadership organisation in the world, reported today that confidence among business leaders in Africa improved marginally in the second quarter of 2017 (2Q 2017).

The YPO Global Pulse Confidence Index for Africa climbed 1.9 points to 56.3, its highest level for two years, although Africa remains the second-least confident region globally, trailing the Index’s global composite score of 62.0 by 5.7 points.

While the overall picture for Africa was one of a slight improvement in confidence, there were significantly different trends within the continent’s major economies.

South Africa, which has the highest weighting in the region, slipped 0.4 point to 54.7, its lowest level since July 2009. This came on the back of a sharp 5.1-point decline in the first quarter of this year. Having consistently scored in the mid- to high 60s between 2012 and 2014, South Africa’s outlook has steadily declined over the past two years, faced with the twin challenges of weak growth and high unemployment.

Conversely, Nigeria, the largest economy in the region, reported a 2.3-point increase in confidence, up from 54.6 to 56.9, its highest level since April 2014. This comes on the heels of a gradual recovery in global oil prices.

Elsewhere, Kenya soared an impressive 12.2 points to 63.4, its highest level for two years, and Zimbabwe moved into positive territory, increasing 10.5 points to 56.2, its highest level since July 2013.

“Although business leaders in these three countries seem to be reporting a significant improvement in confidence, the overall sentiment across Africa remains one of concern,” said YPO member Redda Ben Geloune, CEO of AITEK Group.

“Executives will be approaching decision making and risk with caution in the coming months, amid growing uncertainty about the direction of the regional economy and the stability of the wider global economy.”

Key findings in Africa

Sales and fixed investment forecasts improve, while hiring outlook worsens

It was a mixed picture in Africa when it came to the three key indicators of the YPO Global Pulse Index, which track sales, employment and fixed investment.

The YPO Sales Confidence Index for Africa jumped 3.7 points from 63.9 to 67.6, its highest level since July 2015. More than two-thirds (68%) of chief executives expected to increase turnover within their organisation in the next 12 months, up from 61% in the first quarter of 2017. Only 5% predicted a decline in revenues in the coming year, compared with 12% in the previous quarter.

However, the YPO Employment Confidence Index fell 1.5 points from 53.7 to 52.2, its lowest level since April 2016, suggesting that high unemployment will remain a major challenge for African economies over the next 12 months. Less than a quarter (22%) of business leaders expected to increase the size of their workforce in the coming year, down from 31% in the previous quarter’s study. The majority (70%) of respondents predicted that headcount would remain flat, while 8% expected to cut jobs.

The YPO Fixed Investment Confidence Index for Africa edged up 1.9 points to 59.2. More than a third of chief executives (39%) predicted an increase in fixed investment spending in the next year, versus only 3% that expected to cut investment levels.

Business leaders split on short-term economic climate

When asked to assess whether business and economic conditions would improve or worsen during the second half of the year, business leaders in Africa were split, with the same proportion (31%) predicting an improvement as those predicting a deterioration. The remaining 38% felt that conditions would remain relatively unchanged.

Global review

Globally, the YPO Global Pulse Confidence Index slipped 0.5 point to 62.0 over the second quarter, while executives in Australasia proved to be the most optimistic, and their confidence increased 3.6 points to 67.0.

In Asia, confidence declined 1.8 points to 61.5, reversing the gains made in the first quarter of the year. Confidence in the United States remained firmly in positive territory, with a slight decline of 1.6 points to 63.3; while Canada’s confidence rose 0.8 point to 62.9.

In the European Union (EU), confidence climbed 2.1 points to 63.0, its highest level in the eight-year history of the YPO study; while executives in non-EU Europe countries indicated a dramatic improvement, with confidence up 8.5 points to 60.3, largely due to a complete reversal in Swiss sentiment, which was the main detractor in the region last quarter.

Elsewhere, confidence in Latin America climbed 2.1 points to 59.2, its highest level since January 2014; while the Middle East and North Africa (MENA) region, confidence slid 4.5 points to 50.7, its lowest rating ever, making it the least confident region in the world.

YPO Global Pulse Confidence Index
The quarterly electronic survey, conducted in the first two weeks of July 2017, gathered answers from 1,161 YPO chief executive officers across the globe, including 74 in Africa. Visit for more information about the survey methodology and to view the results from around the world.

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