(Bloomberg) — South African farm sentiment soared as political uncertainty eased after a broad governing alliance was formed following the election.
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A confidence index compiled by the Agricultural Business Chamber, known as Agbiz, and the Industrial Development Corp. rose to 48 points in the third quarter through September, up from 38 in the previous three months. It was the highest level since the third quarter of 2023, the data showed.
“The extreme pessimism in the previous survey was partly due to uncertainty surrounding the elections. The formation of the unity government appears to have allayed those concerns,” Wandile Sihlobo, chief economist at Agbiz, said in a statement on Monday. “The focus is back on fundamental agricultural issues.”
Business and investor confidence has improved since the African National Congress formed a unity government with centrist rivals including the Democratic Alliance after losing its parliamentary majority in May 29 elections. The formation has helped South Africa’s rand and bonds rise, with investors expecting faster economic growth and reforms.
However, the agricultural sector remains somewhat concerned about business conditions, reflected in the fact that the index is still below the ‘neutral’ level of 50, Agbiz said.
According to Sihlobo, the outlook is clouded by factors including a severe drought that affected the 2023-24 summer harvest, as well as weak municipal services and logistical challenges.
“While organised agriculture continues to build a productive relationship with Transnet, there is still room for improved port efficiency,” he said, referring to state-owned rail freight and ports business Transnet SOC Ltd., whose disappointing performance has been blamed for hampering South Africa’s economic growth.
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