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South Africa's optimism about the economic outlook surged significantly in the latter half of 2023, rising by nine points to reach 53%.

 In the third quarter, investments in machinery and equipment decreased by 3.2%, impacting gross fixed capital formation negatively. On the other hand, mid-market businesses anticipated an 8% increase in investment in plant and machinery over the next 12 months.

Looking at the latter half of 2023, South Africa's economic optimism surged by nine points to 53%, contrasting with the global outlook, which decreased by two points to 65%. This increase in optimism coincided with a rise in profitability expectations, up by 13 points to 83%.  


A closer examination of the data offers some explanation for this sharp increase. 

The notable rise in businesses anticipating increased profitability is likely attributed to successful inflation control measures. This is exemplified by a five-point boost (an 11% increase) in the number of businesses anticipating raising their selling prices over the next 12 months. Additionally, StatsSA reported that in Q3 of 2023, businesses opted to store their inventory in warehouses as a precaution against potential economic uncertainties in supply and demand. This strategic move positions businesses favourably to raise selling prices in case of a reduction in supply.  

The constraints faced by South African mid-market businesses in 2023 paint a complex picture, with various challenges impacting margins and decisions. While some concerns have marginally declined, many still remain above average. Despite signs of optimism, the business environment remains intricate, with decisions carrying significant weight in a slower-growth global economy. Ongoing support in navigating these challenges is essential.