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By Phumza Macanda
JOHANNESBURG, Nov 5 (Reuters) - South Africa's business confidence index (BCI) fell to a 5-1/2 year low in October due to concern about the fallout from global financial and economic turmoil, the Chamber of Commerce and Industry said on Wednesday.
SACCI said the BCI's fall to 84.2 from 89.9 in September was its largest month-on-month decline since July 1990 and took the index back to the level that prevailed before interest rates started to fall in June 2003.
"The key contributor to the current state of business confidence is the performance of the global economy and the consequences experienced in South African financial markets," SACCI said in a statement.
A banking crisis in the United States and Europe has sparked a flight out of risky assets around the world and led to concern that there will be a slowdown in global growth.
South Africa's blue chip stocks <.JTOPI> lost 12 percent in
October and the rand currency
Domestic demand growth has slowed as the central bank has raised interest rates by a total of 5 percentage points since June 2006. Vehicle sales fell by 30.1 percent in October, an indication that consumer spending is under pressure.
SACCI said business confidence in South Africa is likely to remain depressed due to the bleak global economic outlook.
"There are signs that the U.S. and Europe are already experiencing recessionary developments and that the knock-on effect will reach other parts of the world in the final months of 2008 and will prevail through much of 2009."
"Business confidence could accordingly remain under strain." (Reporting by Phumza Macanda, editing by Swaha Pattanaik)