Johannesburg - About 46 percent of local businesses increased their sales revenue last year, while 17 percent endured a decline despite economic growth accelerating 3.7 percent in 2004 compared with 2.8 percent in 2003, a survey published yesterday said.
According to the survey, compiled by business to business risk information provider KreditInform, 76 percent of respondents expected interest rates to remain constant, while 13 percent said there was a likelihood that interest rates would fall over the next three months.
The survey covered the country's 100 major corporations across all industries. "In what has been a consistent phenomenon, identified in all four KreditInform barometers to date, company sales revenue in general has increased or at least remained constant.
However, those respondents reporting an increase are down by 11 percent on last year's figures," said Ivor Jones, the managing director of KreditInform.
"Looking ahead, 62 percent of respondents expect positive growth during the next quarter despite the acknowledgement that general economic activity is cooling."
Local firms have been cashing in on a strong consumer spending spree triggered by a combination of generous tax cuts and the lowest interest rates in 24 years.
The buoyant consumer mood has sent property prices and motor vehicle sales to record highs. The report also revealed that 17 percent of firms surveyed anticipated the rand to strengthen against the dollar, while 25 percent of respondents expected the currency to depreciate.
About 58 percent said they saw the rand remaining unchanged from current levels despite its volatile history. The strength of the rand against the dollar has inflicted severe pain on export-oriented firms over the past two years, resulting in declining revenues and massive job losses.
Labour unions and businesses have been calling for a curb of the currency's strength by further reducing interest rates or drastically relaxing exchange controls.
Rudolf Gouws, a chief economist at Rand Merchant Bank, said another interest rate reduction could inspire a surge in credit demand, but not to the detriment of the economy.
But the Reserve Bank expressed concerns last year about the fast-rising credit demand, which tends to fuel spending and inflation in some cases.