Political-Economy Trends and the Car Industry

CAR Conference 2011

SA Economics• SA economy tripped twice since 1994 – in both cases

because of global forces (1998 & 2009). • Growth restored after 2009 recession:• From -1.7% in 2009 to 2.7% in 2010 to 3.4% in

’11 ??• Current consensus: – Rising to 4.4% in 2013 ????

• Average from 1995 to 2010 (16 yrs): 3,3%. • Average 16 years before 1993: 1,55%. • “Muddle thru” economy: 3,25%.

The Muddle Through Economy• Pushing SA growth down:– Global environment.– Domestically: political confusion; strikes; inequality. – Huge social and human deficits; crime, health, education. – Tensions of Transition: mining & agriculture.

• Pushing SA growth up:– Investment: from 4% in 2000 to 6,5% in 2007 to 8,4% in

the current cycle to 2013.– Building blocks of the 3Ms. (“Swing to the Left”). – Reasonable productivity growth.– SA’s increasing relations with BRICs.– Strong private sector institutions (compare Russia).

• Thus 3.25%.

Population Growth

• 1980s 2,5%. (5,8)

• 1996 2,0%.

• 2010 1,06%. (2,38)

• 2014 0,9%.

• Total population now 50,6 million.

1,6%

More work, more unemploymentPeople

Working in SA

15 – 64 age group

Unemploy-ment Rate

UnemployedNumber

1995 9,5 mil 39% 17,7% 1,9 mil

2008 13,8 mil 45% 21,9% 3,9 mil

2011 13,1 mil 40.5% 25.7% 4,5 mil

Remedies for Unemployment• Higher economic growth: – Commodity economy; need diversification. – New Growth Path:

• Promise: 5 mio in 10 yrs. • Pre-condition for success…..?

– What can happen anyway: 3,0 million jobs.• Potpourri of measures: – wage subsidy (R5 bil) & Jobs Fund (R9 bil). – Social grant system: 3,5% of GDP.

• Public Works Programme, incl CWP & “TfF”: – 4,5 mio “job opportunities” to 2014; 4 mths & 6 mths.– 625 000 in first year.

• Deregulated labour market (no chance).

Inequality

Gini Co-Efficient(100 = worst)

Brazil 57

Russia 39.9

India 36.8

China 46.9

South Africa 57.8

Moderation Wins Out (or Some Critical U-turns)

• “Swing to the left” post-Polokwane. • 4 Labour Bills on inter alia labour broking.• NHI proposals:– From ideology to greater efficiency.

• Green Paper on Land Reform:– From ideology to burocracy.

• Bill on Protection of Information.• Reaction against Malema and ANCYL.• Enquiry into the Arms Deal…?

Moderation Wins Out

• Why is this?– Open society (forces and counter-forces; checks &

balances).– Open economy.

• We speak and act our fears, not rational analysis; debate of hatred & resentment.

Living with Ambiguity

Getting Richer

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% chge p.a.

19 yrs-12%

17 yrs+28%25 lost years

What Is Possible in SA (Black Swans Permitting!)

• Economic growth and demography combine to give SA a unique opportunity.

• For the low point in 1993 to 2010 – 17 yrs 28%.

• Just keep on doing it:

–@ 3,25% p.a. & 11,5 years, incomes rise 28%.

–@ 2,55% p.a. & 17 yrs, incomes rise 28%.