Sacci warns of worsening trade conditions despite low inflation boost

The South African Chamber of Commerce and Industry (Sacci) has sounded the alarm over deteriorating trade conditions, with its August 2025 Trade Survey showing only 40% of respondents reporting a positive overall trade experience.

Released on Thursday, the survey highlights how global trade uncertainty, weak domestic economic growth, and persistently high unemployment are combining to erode business confidence.

Sacci noted that trade sentiment had briefly improved in July following interest rate cuts and the monetisation of pension fund investments, which temporarily boosted household disposable income. However, these gains proved short-lived.

“The reality of the real economy under considerable stress and its effect on trade resurfaced strongly in August,” Sacci said.

In May, 69% of businesses expected trade conditions to improve in the next six months. By August, that optimism had slipped to 58%, with concerns growing around weaker sales volumes and rising input costs. Sacci warned that both local and global companies reducing their exposure to South Africa was a worrying sign.

Still, some factors offered support. Low consumer inflation at 3.5% and producer inflation at 1.5% in July contributed to positive household and producer sentiment, while falling diesel prices are expected to reduce input costs.

Sacci cautioned, however, that rising municipal tariffs and property taxes could distort inflation expectations and limit prospects for further interest rate cuts.

The Chamber added that while lower interest rates, stronger vehicle sales, rising merchandise imports, more overseas tourists, and higher building plan approvals lifted sentiment, weakening merchandise exports and declining retail sales remained red flags.

Despite the mixed outlook, businesses did not indicate plans to cut jobs in the near term.

Sacci added that the trade outlook for the next six months deteriorated over all the elements of trade.

“Whereas 67% of the respondents were positive about the trade outlook six months ago, 58% had a positive six-month outlook in August 2025. Expectations on sales volumes weakened notably along with rising input costs on the cards.”

Professor Waldo Krugell, an economist at North-West University, said the survey reflected a divide between financial market gains and real economic performance.

Krugell said that the JSE was at an all-time high, the gold price was high, the rand is strong, and inflation was low.

“All that's positive news from the economy. But then on the real side, you can see from something like the business confidence indices, consumer confidence indices, and Sacci trade survey that things are being tough out there in the real economy," he said.

"Consumers' demand is really dampened, and the consumers that are spending a bit are spending on a little bit of eating out, some touristing around locally, and then clothing and footwear. It's not the sort of stuff that drives economic growth.”

Krugell added that businesses all around were feeling the strain, and that's why these numbers coming out say business conditions are tough.

“The big problem, of course, is the drivers of growth, the stuff that really needs to sort of lift economic growth above 1%. Investment and exports are under pressure from policy uncertainty, and I think we're still going to see more of this to come.”

BUSINESS REPORT