Favorable business climate despite inflation

Despite the uncertainties linked to the Russian war in Ukraine and its consequences on the activity of Reunion companies, the business climate is largely favorable on the island, according to the Iédom economic report drawn up at the end of the 2nd quarter of 2022. The business climate indicator stands at 118,4 and remains significantly above its long-term level (100). The professionals interviewed highlight an improvement in cash flow levels and increase their investment forecasts for the next twelve months. Activity remains well oriented in all sectors. In a context marked by the sharp increase in raw material prices, managers also report a significant increase in sales prices. Professionals express concerns about the persistence of inflationary pressures and anticipate a greater deterioration in their operating expenses. However, the outlook for the 3rd quarter remains favorable and activity should continue. The effect of rising freight and raw material prices on inflation is noticeable, with a consumer price index up 4,2% year-on-year at the end of June 2022. However, household consumption remains stable, announces Iédom, with credit card payments higher than 7,6% compared to the same period a year earlier. Imports of everyday products and household equipment also continue to increase and sales of new vehicles show a clear increase this quarter.