sa’s macroeconomic situation: - mole heap or volcano? presented by: dawie roodt 22 june 2006
TRANSCRIPT
SA’s Macroeconomic Situation:- Mole Heap or Volcano?
Presented by:Dawie Roodt22 June 2006
Mole Heap
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
R
Percentage of World GDP ‘04
1%2%2%
2%4%
5%5%7%
11%
28%
33% South Africa
Russia
Brazil
India
UK
China
France
Germany
Japan
USA
Rest of the World
Source: UNAIDS
GDP
Africa, South 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
Countries Compared to Provinces
Country and Province GDP 2004 ($ Bn)
0 20 40 60 80 100 120 140 160 180 200 220
South AfricaEgypt
AlgeriaNigeria
GautengMorocco
KwaZulu-NatalWestern Cape
TunisiaAngolaSudan
Libyan ArabEastern CapeCote d'Ivoire
CameroonMpumalanga
KenyaLimpopo
North-WestFreestateTanzania
GhanaBotswana
EthiopiaUgandaSenegal
GabonDRC
MozambiqueMauritius
NamibiaZambia
Northern CapeMali
ZimbabweBurkina Faso
CongoBenin
MadagascarChad
GuineaSmallest 20
Source: UN
State Finances
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 2008
%
State Finances
Government Debt:GDP
25
30
35
40
45
50
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
%
Debt trapRecovery
Normal Normal
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
%
14.619.91%
5.15%
Inflation
CPIX
2
3
4
5
6
7
Jan-04 Jan-05 Jan-06 Jan-07
%
4.5%
Conclusion
Solid GDP growth Sustainable state debt Benign inflation outlook: CPIX within target for
32 months Strong consumer confidence Strong business confidence
Volcano
Exchange rates
R/$ and R/Euro
5
6
7
8
9
10
11
12
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07
Rand
PPP Cycle (R vs. USA$)/Big Mac
-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 Jan-07
%
Rand Valuation
Gold $800
Rubicon
Stock exchange crash
ANC, Reds fall
Election Exchange controls
Asian
crises
Wakefordgate
Rus, Zim, Arg
Fin Rand
NOFP + NOFP -
Private Sector Credit Extension
Private Sector Credit Extension (PSCE)
8
10
12
14
16
18
20
22
24
26
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07
%
Disposable income of households
Change in disposable income of households
-4
-2
0
2
4
6
8
10
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
%
Source: SARB
Household debt to disposable income
Household debt to disposable income of households
30
35
40
45
50
55
60
65
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
%
Source: SARB
Savings to disposable income of households
Ratio of saving by households to disposable income of households
0
2
4
6
8
10
12
14
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
%
Source: SARB
Debt Servicing Cost
Debt payment cost % of disposable income
0
2
4
6
8
10
12
14
16
Q1 94 Q1 95 Q1 96 Q1 97 Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05
%
Interest rates
Prime
9
11
13
15
17
19
21
23
25
Jan-80
Jan-82
Jan-84
Jan-86
Jan-88
Jan-90
Jan-92
Jan-94
Jan-96
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06
%
De Kock
Stals
Mboweni
Interest rates
Prime
10.00
10.25
10.50
10.75
11.00
11.25
11.50
11.75
Jan-04 Jan-06
%
Commodity Prices
Gauteng Pump price (cents) and Brent Crude Oil Price ($ per barrel)
0
100
200
300
400
500
600
700
Jan-00 Jan-02 Jan-04 Jan-060
10
20
30
40
50
60
70
80 $Cent
s
Commodity Prices
Gold Price: Rand and Dollar (spot per ounce)
500
1000
1500
2000
2500
3000
3500
4000
4500
Jan-00 Jan-02 Jan-04 Jan-06
Rand
0
100
200
300
400
500
600
700 $
Balance of Payments
Balance of Payments
Current Account vs Financial Account
-8
-6
-4
-2
0
2
4
6
8
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
% GDPBarclays/Absa
De Beers delisting
Sanctions liftedDebt Standstill
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
Conclusions
Currency exposed to global volatility Alarming increase in PSCE Stellar household debt/disposable income Lack of ‘savings culture’ by households Unexpected interest rate movements (on household budgets) Commodity prices – effect on businesses and inflation outlook Large current account deficit Labour productivity Effects of illnesses (AIDS, etc.) on workforce Transparency of Monetary Policy Authorities – CPIX targets 2010 and beyond…?
Mistakes made in Africa
Private Property RightsRegulated PricesIdolise LeadersMarketing BoardsNepotismIncompetenceCorruptionPoor Fiscal DisciplinePoor Monetary PolicyUnrealistic Projects
?
???
Asset Allocation
Reason
Equities ( ) Demand/Rand/International
Bonds Inflation/Supply
Cash Short Interest rates
Property Property Cycle
– Heavy Overweight
– Overweight
– Neutral
– Underweight
– Heavy Underweight
Local Equities, 2005
Economic Sector All JSE Sector
Agri, Forestry and Fishing Food Prod
Mining and Quarrying Mining, Platinum, Gold, Coal
ManufacturingAuto, Basic Ind, Beverages, Chem, Elect, IT Hard, Pharm & Bio, Steel & Other
Electricity, gas and water Oil & Gas
Construction Const & Build
Trade, hotels and restaurantsCyc Cons, Food & Drug, Gen Retail, House Goods, Non-cyc Cons
Transport, storage and comm. Telecomm, Transport
Finance, prop and bus. servBanks, Insurance, Life Ass, Media & Pht, IT, Property, Support Serv
Personal Service Cyc Serv, Health, Leisure Ent, Non-cyc Serv, Person Care
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