CEO confidence index surprises on the upside
independent corporate finance and research company Merchantec says it has attained its highest CEO confidence index score since its inception in the second quarter of 2009, indicating a renewed optimism among South Africa’s CEOs about the overall economic environment for 2012.
The index bucked its downward trend of the previous three quarters to increase by 20% to 65.6 points in the first quarter of 2012.
A noticeable improvement in the confidence of CEOs across all sectors suggests that the economic fears, which dominated 2011, may be dissipating. The European Central Bank’s liquidity injection into the eurozone, as well as continued solid economic data coming out of the US of late, seems to be soothing fears relating to the credit crunch and contributing to growing the sentiment towards stability.
The South African Reserve Bank also appears upbeat about the South African economy, with figures reflecting substantial acceleration in government and household spend.
The basic materials sector, which includes the mining sector, recorded a 19% increase to a score of 68, the highest score across any sector. This comes as no surprise, considering low interest rates, continued high commodity prices and government’s indication that the nationalisation of mines will not be pursued.
Further evidence of optimism within the sector is a 33% leap in sentiment towards economic conditions and a 140% surge in confidence in their ability to obtain debt or equity capital.
A total of 55% of CEOs across all sectors indicated that they are confident of the ability of the 2012 National Budget to maintain macroeconomic stability in South Africa and to support enterprise and job creation.
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