CONFIDENCE levels of CEOs at SA’s listed companies have plummeted to a seven-year low amid rising interest rates and concerns that the country’s credit rating will be downgraded on faltering economic growth.

CEOs also see current economic conditions in the country and their ability to secure debt or equity capital as moderately worse compared to six months ago. Most are expecting growth in their industry and company, and planned levels of investment, to decrease slightly.

The Merchantec CEO confidence index released on Wednesday, has fallen to 38.1 points in this quarter (January to March) — the lowest score recorded since the index’s inception in 2009 and the fifth consecutive quarter in which the confidence of CEOs has dropped.

"The foresight of a potential rating downgrade draws mainly from the lack of trust in leadership, current fiscal policies, overregulation and low growth prospects," Merchantec said. "CEOs indicate a common sentiment that SA’s political landscape is out of touch with business challenges and that the budget is too reliant on government cutting costs."

The index, which is prepared quarterly by one of SA’s largest independent corporate finance advisory companies, Merchantec Capital, is compiled after a survey of more than 1,000 top CEOs at primarily listed companies across various sectors for their views on the economy among others.

About 64% of CEOs believed SA was heading for a ratings downgrade this year while 36% of CEOs were optimistic that the economy would persist through its challenges and become stable. Downgrades raise the cost of borrowing.

While confidence was particularly weak in the financial sector, the basic materials sector reported the largest increase in confidence in both planned level of investment in their companies and current economic conditions compared to those of six months ago.