a macroeconomic perspective on budget 2003 dr iraj abedian director & group economist hearings...
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![Page 1: A Macroeconomic Perspective on Budget 2003 Dr Iraj Abedian Director & Group Economist Hearings on the Appropriation Bill (Budget 2003/4) The Parliament,](https://reader035.vdocuments.us/reader035/viewer/2022062719/56649ee15503460f94bf19df/html5/thumbnails/1.jpg)
A Macroeconomic Perspective A Macroeconomic Perspective on Budget 2003on Budget 2003
Dr Iraj AbedianDirector & Group Economist
Hearings on the Appropriation Bill (Budget 2003/4)
The Parliament, Cape Town
March 5, 2003
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Presentation outline
A global economy perspective
A national economy perspective
The 2003 Budget & its major macroeconomic aspects
Concluding remarks
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A global perspective
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
United States
United Kingdom
EMU
Japan
Major economies in trouble
Real GDP growth in 2002
% q/q, seasonally adjusted and annualised
Source: Bloomberg
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
South Africa
Source: Statistics South Africa
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2003
United States United KingdomEMU Japan
RSA likely to outshine majors
Projected real GDP growth
% y/y
Source: IMF World Economic Outlook, September 2002
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2003 2004 2005
SBSA
Budget 2003
Source: Standard Bank Economics & Budget 2003
South Africa
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-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
United States United KingdomEMU Japan
Balance of Payments in healthy state…
Current account balance as a % of GDP
Source: OECD
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
South Africa
Source: SARB Quarterly Bulletin
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-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
1990
199119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
04
United States United KingdomEMU Japan
Global fiscal pressures on the rise…General government financial balances
Surplus (+) / deficit (-) as a % of GDP
Source: OECD
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
South Africa
Source: Various National Budgets
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Global government debt rising…!
(% of GDP)General government gross financial liabilities
20
40
60
80
100
120
140
160
United States
United Kingdom
EMU
Japan
Source: OECD
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40
50
60
70
80
90
100
110
2000 2001
Index January 2000 = 100Falling index equals US$ appreciation
2002
GBP/US$
EURO/US$
US$/ZAR
US$/JPY
Source: Bloomberg, Standard Bank Economics
2003
US$ falling compared to majors & Rand..
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40
50
60
70
80
90
100
110
2001
Index January 2001 = 100Falling index equals US$ appreciation
2002
AUD
BRL
ZAR
PZL
Source: Bloomberg, Standard Bank Economics
2003
US$ falling compared to select minors:
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A national economy perspective
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-4
-2
0
2
4
6
8
10 % per annum
1970s 1980s1960s
Source: Statistics South Africa & Standard Bank Economics
1990s 2000s
Turning
pointForecast
Secular turn in RSA GDP growth
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SA’s rising economic resilience
Pillar One:
Reinforced by Structural Changes,
South Africa’s Economic Efficiency is rising……
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Structural changes have transformed the economy….
0
10
20
30
40
50
60
70
1950s 1960s 1970s 1980s 1990s 2002
Primary Secondary Tertiary
% share of total GDP
Source: SARB Quarterly Bulletin; Statistics South Africa
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10
15
20
25
30
35
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
SA’s rising export levels & rising competitiveness
Total exports to GDP
Source: SARB Quarterly Bulletin
6967
6463
61
5651484645
40333231
242120191713119876543
21
0 1 2 3 4 5 6 7 8
TurkeyIndonesia
RussiaArgentina
PhilippinesColumbia
PolandIndia
BrazilMexico
Czech RepublicChina
South AfricaThailand
IrelandSouth Korea
ChileIsrael
Hong KongJapanBritain
NorwayCanada
AustraliaSwitzerland
SwedenSingapore
TaiwanFinland
United States
Source: World Economic Forum
Competitiveness rankings
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SA’s rising economic resilience
Pillar Two:
SA’s export diversification paying off
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17
0
10
20
30
40
50
60
70
80
90
100
1996 1997 1998 1999 2000 2001 2002
20
22
24
26
28
30
32
34
36Non-resources exportsNet gold exportsExports to GDP
South Africa’s declining dependence on commodities, amid increased export orientation
Exp
ort/G
DP
ratio
AverageQ1-Q3
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Increased manufacturing orientation of SA Exports
10
20
30
40
50
60
70
80
90
1991-1995
Shares in total exports, 1995 prices
1996-2000
Source: TIPS
Mining Manufacturing
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SA’s rising economic resilience
Pillar Three:
Macroeconomic Stability & Solid Fiscal Conditions
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SA: real GDP & rising fixed investment
-2
0
2
4
6
8
10
2000
Percent change q/q, seasonally adjusted and annualised
2001 2002
Source: SA Reserve Bank
Gross fixed investment
Government expenditure
Household consumption expenditure
GDP
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Inflationary Trends Declining…
Source: Statistics South Africa, Standard Bank Economics
0
5
10
15
20
25%
CPI
PPI
80 82 84 86 88 90 92 94 96 98 00 02 2000 2001
%
CPI
PPI
2002 2003
Forecast
Secular downtrend temporarily restrained
2
4
6
8
10
12
14
16
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2
6
10
14
18
22
26
Feb-98 Feb-99 Feb-00 Feb-01 Feb-02 Feb-03
Percent per annum
Real prime -deflated by CPIX
Nominal prime
Forecast
SA’s declining interest rates outlook
CPIX
Real prime forecast based on updated
CPIX forecasts and current Alt 2
interest rate outlook
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0
5
10
15
20
25
1999 2000 2001 2002 2003
Prime Repo
SA’s attractive yield draws inflows…
RSA nominal interest rates
Source: SBSA (EcoServ)
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
USA UKEMU RSA
Source: IMF World Economic Outlook, Consensus Economics & SBSA
Real interest rates% %
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-20
-10
0
10
20
30
40
50
Tu
rke
y
Bra
zil
Ve
ne
zue
la
Ru
ss
ia
So
uth
Afr
ica
Ind
on
es
ia
Cro
ati
a
Me
xic
o
Eg
yp
t
Ph
ilip
pin
es
Co
lom
bia
Po
lan
d
Isra
el
Ind
ia
Arg
en
tin
a
Hu
ng
ary
So
uth
Ko
rea
Pe
ru
Ma
lay
sia
Ch
ile
Cze
ch
Re
pu
blic
Th
aila
nd
Ta
iwa
n
Ho
ng
Ko
ng
Sin
ga
po
re
Interest rates GDP
Emerging markets comparison:short-term interest rates & GDP (Q3/02, %Y/Y)
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40
50
60
70
80
90
100
110
2000 2001
Index January 2000 = 100Falling index equals rand depreciation
2002
Euro/ZAR
GBP/ZAR
US$/ZAR
ZAR/JPY
Source: Bloomberg, Standard Bank Economics
R13/86/$ on 20 Dec 2001
2003
ZAR against primary currencies
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SA’s rising economic resilience
Pillar Four:
Deepening Democracy & Social Stability