South African business confidence increased in the third quarter, according to a survey released on Wednesday.
The business confidence index rose to 38 points from 35 points in the previous quarter.
The survey was conducted by Rand Merchant Bank (RMB) and compiled by the Bureau for Economic Research.
The rise in confidence is attributed to improved optimism about the business climate.
The formation of a coalition government and stable electricity supply have contributed to this positive shift.
Isaah Mhlanga, chief economist at RMB, noted that a widely anticipated interest rate cut later this month should boost domestic demand.
The South African Reserve Bank is expected to lower interest rates for the first time in four years.
This change is anticipated to spur economic activity. The interest rate cut follows lower consumer inflation and the introduction of the two-pot retirement system.
In May, the African National Congress lost its parliamentary majority for the first time in 30 years.
The party subsequently formed a broad coalition with several parties, including the market-friendly Democratic Alliance.
The state-owned power utility Eskom has managed to avoid scheduled blackouts for over five months.
This stability in electricity supply is a significant improvement in a country where power cuts have long hindered economic growth.
