11 october 2005 a walk through the global village dawie roodt efficient group presented by
TRANSCRIPT
11 October 2005
A Walk Through
the Global Village
Dawie RoodtEfficient Group
Presented by
Index
• Us• Our Neighbours• Us and Them• Global Hotspots• If I was the Minister• Threats• Pick Your Currency• What now?
Us
Economic Aggregates
Economic Aggregates 2004 2005
Fiscal Deficit (Fiscal) -1.6% -0.9%
CPIX (average) 4.3% 4.2%
Prime Interest rate (year-end) 11.0% 10.5%
PSCE (year-end) adj 16.1% 18.6%
Current Account : GDP -2.9% -2.7%
R/$ (year-end) 5.73 6.51
GDP (full year) 3.7% 4.4%
Outcome:Revenue
R bn Budget ‘04 Efficient Difference Budget ‘05 Efficient Difference
Personal Tax 105.9 110.8 4.9 116.9 123.2 6.3
Company Tax 68.8 71.3 2.5 68.7 87.5 18.8
VAT 89.5 98.1 8.6 106.0 109.5 3.6
Excise Duties 13.1 13.8 0.7 14.5 13.6 -0.9
Fuel levy 17.4 18.7 1.3 20.7 20.9 0.2
Other 32.3 34.6 2.3 43.3 44.8 1.3
Total 327.0 347.3 20.3 370.1 399.5 29.3
State Finance
Deficit:GDP
-8
-7
-6
-5
-4
-3
-2
-1
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
%
Government Finance
Government Debt: GDP
25
30
35
40
45
50
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
%
Heading for debt trap Consolidation
Stable
Inflation
CPI
0
3
6
9
12
15
18
21
Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06
%
14.61%
9.91%
5.24%
Interest Rates
Prime
9
11
13
15
17
19
21
23
25
Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04
%
?
De KockStals
Mboweni
BoP
Current Account vs Financial Account
-60
-40
-20
0
20
40
60
80
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
R bnBarclays/Absa
De Beers DelistingWakefordgateLifting of Int
SanctionsDebt Standstill
PPP Cycle (R vs. USA$)
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04
%
Rand Valuation
Gold $800
Rubicon
Stock market crash
ANC, Reds fall
Elections Exchange controls
Asia
n
Wakefordgate
Rus, Zim, Arg
Fin RandNOFP + NOFP
-
GDP
GDP
-3
-2
-1
0
1
2
3
4
5
6
7
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
%
GDP
GDP per capita '00
20000
20500
21000
21500
22000
22500
23000
23500
24000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
RGold
Lifting of Int Sanctions Asian
Crises
Our Neighbours
4% of African Area
23% of African GDP
21.2% of African Exports
Mistakes made in Africa
• Idolise Leaders• Marketing Boards• Nepotism• Incompetence• Corruption• Poor Fiscal Discipline• Too Relaxed Monetary Policy• Unrealistic Projects
?
???
GDP
Africa, World GDP per Capita
0
1000
2000
3000
4000
5000
6000
7000
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
$
Source: UN
AIDS
People infected with Aids
20%
68%3%1%
4%
4%
Asia Africa Eastern Europe & Central Asia Caribbean Latin America High Income Countries
Source: UNAIDS
Us and them
$
€ Yuan ¥£
R
Euro Composition
Country Currency Conversion rate:€1
Austria Schillings 13.76
Belgium Francs 40.34
Finland Markkaa 5.95
France Francs 6.56
Germany Deutsche Marks 1.96
Greece Drachmae 340.75
Ireland Pound 0.79
Italy Lire 1936.27
Luxembourg Francs 40.34
Netherlands Guilder 2.20
Portugal Escudos 200.48
Spain Pesetas 166.39
$
€ Yuan ¥
15 years?
$
€Yuan ¥
€
50 years?
$
€?
€
Sensible?
Percentage of World, ‘04
Country Country Area GDP GDP per Capita International Trade (03)
Africa 20.3% 2.2% $895 2.5%South Africa 0.8% 0.5% $4 507 0.4%Japan 0.3% 11.4% $36 501 4.4%France 0.4% 5.0% $32 984 5.2%Germany 0.2% 6.8% $33 162 7.9%UK 0.2% 4.3% $35 718 4.5%USA 6.4% 27.6% $35 718 12.2%China 6.4% 4.5% $1 283 2.5%Russia 11.4% 1.5% $4 047 16.8%India 2.2% 2.2% $626 0.9%Brazil 5.7% 1.9% $3 225 0.9%
GDP, y:y Q2 05
GDP
0
1
2
3
4
5
6
7
8
9
10
SouthAfrica
Japan France Germany UK USA China Russia India Brazil
%
Source: Economist
GDP, 99 – ’03 avg
GDP
0
1
2
3
4
5
6
7
8
9
SouthAfrica
Japan France Germany UK USA China Russia India Brazil
%
Source: World Bank
Inflation, Aug 05
CPI
-2
0
2
4
6
8
10
12
14
SouthAfrica
Japan France Germany* UK USA China Russia* India Brazil
%
* Sep
Source: Economist
Interest Rates, Aug 05
Short termInterest Rates
0
2
4
6
8
10
12
14
16
18
20
SouthAfrica
Japan France Germany UK USA China Russia India Brazil
%
Source: Economist
Africa - Loser
FDI In: $15bn
FDI Out: $1.3bn
Western Europe
FDI In: $310.2bn
FDI Out: $350.3bn
North America
FDI In: $36.4bn
FDI Out: $173.4bn
South America
FDI In: $49.7bn
FDI Out: $10.7bn
Central & Eastern Europe
FDI In: $20.9bn
FDI Out: $7.0bn Asia - Winner
FDI In: $107.1bn
FDI Out: $23.6bn
FDI Flows 2003
Source: World Bank
Global Hotspots
Hotspot
If China grows at its five year average (8.52%) it will surpass the US in 2040 if the US continues at 2.78%
Tax systems
Personal Corporate Dividends Sales, value added
France 49.58% (€47 131) 34.33% territorial Income tax 19.6%
Germany 47% from (€52 293) 27.9575% Income tax, 50% exempt
16.0%
Japan 50% nat.; local (¥18m)
30.0% Comp tax 50% exempt; income tax
16.0%
UK 40% (£30 500) 30.0% 10%; 32.5% (£30 500) 17.5%
USA 35% Fed; 0-11% state ($311 950)
35.0% Federal + 0-12% state
Comp tax; 5-15%; double taxed
0% Federal + 0-7.25% state
SA 40% from R300 000 29% 12.5% exempt in indv 14%
Flat Taxes Systems
• Flat tax first introduced in the 19th century• Estonia – 24%• Latvia – 25%• Russia – 13%• Slovakia – 19%• Romania – 16%• US States ranging from 3.5% - 5.3%
• Illinois• Indiana• Massachusetts• Michigan• Pennsylvania
• Canada provinces– Alberta – 10.5%
Considering Flat Tax Systems
• Poland – 15%• Greece – 25%• Czech Republic• Croatia• The Netherlands – 40%• USA
If I was the Minister
Tax Requirements
• Consumption tax + 6%
• Redistribution tax + tax on dividends
• Sin taxes
Tax Requirements
• Consumption tax + 6%
• Redistribution tax + tax on dividends
• Sin taxes
• No corporate taxes
• No other taxes
Threats
Oil: Impact
Brent Near Future - Oil Price
10
20
30
40
50
60
70
Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06
$ p/b
Oil: Impact
Real Rand Oil Price
50
100
150
200
250
300
350
400
450
Jan-85 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05
R p/b
Commodities
Goldman Sachs Commodity Index
100
150
200
250
300
350
400
450
500
Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04
Pick Your Currency
Euro (3.00%)
80
90
100
110
120
130
140
150
160
170
Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04
International Currencies
Pound (4.50%)
45
55
65
75
85
95
105
Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04
International Currencies
Dollar (3.75%)
85
90
95
100
105
110
115
120
125
Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04
International Currencies
Yen (0.10%)
90
140
190
240
290
340
Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04
International Currencies
What now?
Asset Allocation, 2005
Reason
Domestic Ratings upgrades, GDP, Commodities
International ( ) Uncertainty over oil price; economic recovery
– Heavy Overweight
– Overweight
– Neutral
– Underweight
– Heavy Underweight
Asset Allocation, 2005
Domestic International
Equities
Property ( )
Bonds
Cash
– Heavy Overweight – Overweight
– Neutral – Underweight
– Heavy Underweight
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