There has been a sharp decline in confidence in the local economic situation. This is according to the Graduate Professionals Confidence Index compiled by insurance and investment company PPS.
The index - conducted on a quarterly basis - tracks the confidence levels of nearly 3,000 of South Africa's graduate professionals.
The latest survey - released on Thursday - tracked confidence levels on a variety of issues such as the economy, emigration, crime, and healthcare.
According to Gerhard Joubert, head of group marketing and stakeholder relations at PPS, the results demonstrated that the state of the economy was one of the most pressing issues for graduate professionals currently.
"Inflation remains high, putting pressure on people's finances, whilst at the same time the economic recovery appears to be tapering off with official statistics showing economic growth slowed to a two-year low of 1.3% in the second quarter."
Graduate professional's confidence in the economic outlook for South Africa over the next 12 months fell to 56% in the third quarter, from 64% in the previous three months. Also down sharply was the outlook on the local equity market, with a confidence level of 56% in the third quarter, compared to 64% in the previous three months while 59% of respondents further said they did not expect the rand to strengthen against other major market currencies over the next 12 months.
"Professionals are less certain on the outlook of equities over the next 12 months than they were a quarter ago, and the majority felt it likely that the rand would depreciate against other major currencies over the next 12 months," Nick Battersby, CEO at PPS Investments, said.
"This is despite a considerable sell-off of equities over the quarter, and the depreciation of the rand against most major currencies."
Confidence that South Africa had seen the worst of the economic turmoil was also low at just 45%, while 71% of respondents said they expected to see a double dip recession.
"This is a considerably worse prediction than most experts, including the International Monetary Fund (IMF) which released its World Economic Outlook Report in September. While adjusting its global growth forecast downwards, the IMF still expects the global economy to grow at 4% in 2012," Battersby added.
Joubert said confidence in the government's ability to improve levels of unemployment over the next five years was the worst result of all in this period, with a confidence level of just 29%, down 13% from the 42% recorded in the second quarter.
"This is a huge drop in confidence and it likely also stems from the fact that the outlook for both the local and global economies appears to be worsening. Stats SA also revealed recently that employment contracted by 2.9% last year - equivalent to losing 395,000 jobs. This is a serious concern as the government has targeted job creation as a main priority going forward."
On the future of the health care system in South Africa over the next five years, a confidence level of 46% was recorded, unchanged from last time. But on whether the National Health Insurance (NHI) would have a positive impact on South Africa had improved to 46% from 44% last time.
"PPS has held a series of consultation sessions with our graduate professional members on NHI and they have raised some serious concerns about the lack of consultation involved in the process. Another serious concern we have picked up on is that the current issues that exist in the health care system and the proposed policy intervention have little relation to each other," said Joubert.
"Overall confidence levels arising from the survey remained unchanged at 57% in the third quarter from the second; however, it is clear from these results that professionals have some very real concerns about their own and the wider financial situation; this will most likely be an overriding issue for the remainder of the year and well into 2012."
The survey also showed that confidence of remaining in South Africa was unchanged at 81% in the second quarter while confidence in crime rates improving over the next five years increased to 45% from 43% in the second quarter.
Confidence in the standard of education in South Africa improving over the next five years rose to 48% from 47% while 89% of respondents said they were concerned about the rising cost of education compared with 84% previously.
The survey also showed that confidence about the opportunities available to practitioners working within their specific profession over the next 12 months had declined to 73% from 74% while confidence in the protection that the Consumer Protection Act (CPA) offered had fallen to 68% from 69% previously. - I-Net Bridge
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