Read the following article and answer the questions that follow: 1. With reference to the data, state
Question:
Read the following article and answer the questions that follow:
1. With reference to the data, state the extent of the decrease in business confidence between the last quarter of 2018 and the first quarter of 2019.
2. Outline the reasons for the decline.
3. Use a diagram to show how the change in business expectations might influence aggregate demand.
Transcribed Image Text:
SA business confidence falls to almost two-year low South African business confidence fell to the lowest level in almost two years in the first quarter of 2019, with more than two thirds of respondents dissatisfied with current con- ditions. A gauge measuring sentiment declined to 28 in the first quar- ter from 31 in the final three months of 2018. The median estimate of four economists in a Bloomberg survey was 32. Key Insights Confidence in the retail industry is at the lowest since the end of 2013. Sentiment among retailers and builders fell the most, with the latter reflecting a dearth of new work, the sur- vey showed. Confidence levels in four of the five sectors cov- ered in the index fell. President Cyril Ramaphosa's rise to power boosted business confidence in early 2018 but sentiment has slumped as trading conditions remain depressed. While his efforts to expose corruption, rebuild institutions and bolster investment will bear fruit in the longer term, "forceful, and in some instances, unpopular structural reforms must also form part of the mix," said Ettienne le Roux, the chief economist at RMB. "South Africa will not be able to shift to a lasting, higher growth and prosperity path without more short-term pain", said Le Roux. "This time around, the country cannot rely on the global economy to counterbalance such internal adjust- ment costs, as global growth itself is now shifting to a lower gear." Africa's most-industrialised economy expanded 0.8% in 2018 and is struggling to gain momentum as rolling black- outs threaten to damp prospects of a recovery. The index reflects the results of a survey of 1,700 business- people, with most responses received from February 13 to March 4. Source: Adapted from Bloomberg NEWS, March 13 2019
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