Growth slows as oil, food hikes hit home

Business confidence declined further in May, continuing a trend started at the beginning of last year and reflecting a general slowdown in economic growth, a survey showed yesterday.

Business confidence declined further in May, continuing a trend started at the beginning of last year and reflecting a general slowdown in economic growth, a survey showed yesterday.

The South African Chamber of Commerce and Industry (SACCI) said its business confidence index slipped to 93,0 in May from 93,4 in April. The monthly gauge has been below 100 since registering 100,2 in May last year.

"The continuing high crude oil prices, much higher global and local food prices and global food shortages are the other most pressing concerns at present," SACCI said. "Both have a negative effect on business confidence."

South Africa's economic growth averaged more than five percent for the past four years but is seen slowing to four percent, or lower, this year, partly due to an electricity crunch as state power utility Eskom's ageing generation infrastructure struggles to cope with demand.

Businesses have also been grappling with higher interest rates, which the Reserve Bank has raised by 450 basis points to 11,5percent since June 2006 in an effort to rein in inflation. - Reuters

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