Economic sentiment in South Africa declines to seven-year low
JOHANNESBURG, 9 May 2017 – YPO, the premier chief executive leadership organisation in the world, reported today that confidence among business leaders in Africa remained relatively unchanged in the first quarter of 2017 (1Q 2017). The YPO Global Pulse Confidence Index for Africa edged down for the second consecutive quarter, falling 0.3 point to 54.4.
Once again, African chief executives are among the least confident in the world, trailing their counterparts in every other region, with the exception of non-EU Europe, and far behind the Index’s global composite score of 62.5.
While there was little change in the overall score for Africa, there were marked shifts in sentiment within the region’s major economies. South Africa, which has the highest weighting in the region, dropped 5.1 points from 60.2 to 55.1, its lowest level since July 2009. Meanwhile, confidence in Kenya dropped 1.0 point from 52.2 to 51.2, its lowest level since October 2015.
Nigeria saw a significant improvement in outlook, jumping 12.7 points from 41.9 to 54.6, its highest level since October 2014. Zimbabwe also reported a more positive outlook, climbing 3.0 points from 42.7 to 45.7, although at this level it remains in deeply pessimistic territory.
“Business leaders in Africa are unsurprisingly concerned about the economic climate, both within the region and at a global level. With increased socio-political uncertainty in virtually every region in the world, the mood is likely to remain subdued in the second half of this year”, said YPO member, Loic Potjes, a Director at Securitas SA and Founder of Disruptive Leap, “Chief executives will remain extremely watchful in the coming months, closely monitoring economic indicators and looking to minimise risk as much as possible.”
Globally, the YPO Global Pulse Confidence Index edged up 0.3 point to 62.5 during the quarter under review, its highest level since January 2015. For the second consecutive quarter, the United States reported the highest level of confidence in the world, inching up 0.3 point from 64.6 to 64.9. Confidence in the European Union (EU) remained flat at 60.9, whilst Asia climbed 2.1 points from 61.2 to 63.3, its highest level since April 2015. Elsewhere, confidence in Latin America dropped 1.2 points to 57.1, while confidence in the Middle East and North Africa slumped 4.3 points from 59.5 to 55.2. Non-EU Europe reported the lowest level of confidence in the world, falling 2.5 points from 54.3 to 51.8.
Key findings in Africa
Economic conditions deteriorating
When asked to comment on how current business and economic conditions in Africa have changed over the last six months, African chief executives reported a worsening situation. More than half (55%) stated conditions had deteriorated in the previous six months, versus only 23% who reported an improvement.
Looking ahead to the next six months, more than a third (37%) of business leaders expected the economic climate to decline further, against 29% who believed conditions would improve.
Chief executives still positive about prospects for growth in next 12 months
Despite their concerns over the general economic conditions in the region, business leaders in Africa remained optimistic about the short-term prospects for their own organisations.
The YPO Sales Confidence Index for Africa climbed 2.9 points to 63.9. Almost two-thirds (61%) of respondents expected to increase turnover within their organization in the next 12 months, up from 54% in the final quarter of 2016. Only 12% of chief executives predicted a decline in revenues, versus 15% in the previous quarter.
The YPO Employment Confidence Index remained unchanged at 53.7. The majority of chief executives (59%) reported that staff headcount was likely to stay flat in the next 12 months, whilst almost a third (31%) expected to increase hiring and 10% expected their workforce to shrink.
The YPO Fixed Investment Index edged down 0.3 point to 57.3, its lowest level for a year. More than a third of the participants (38%) predicted an increase in fixed investment in 2017, whereas only 11% expected to cut investment levels.
YPO Global Pulse Confidence Index
The quarterly electronic survey, conducted in the first two weeks of April 2017, gathered answers from 1,216 YPO chief executive officers across the globe, including 143 in Africa. Visit www.ypo.org/globalpulse for more information about the survey methodology and to view the results from around the world.
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