2013 weather forecast january 2013

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2013 weather forecast january 2013

  1. 1. 2013 Weather Forecast Cloudy with a chance of rubber bullets29 Jan 2013 1
  2. 2. Economic activity will be more positive than in2012, but... Many Lessons to be Locall conditions may learned from 2012 impede growth Negative spill-over Limited influence of through trade channels is monetary and fiscal high for South Africa - policy large dependence on Europe for exports of Labour unrest may harm manufactured goods production and increase pressure on the currency Export orders for South African goods will pick up Downside risk from in 2013, aided by an Europe is still a concern anticipated weaker Rand Positive growth sentiment from the US ? 2
  3. 3. In 2012 conditions were stormy and foggy Europe Growth & Industrial Output, 2012  2012 started off gloomy with limited opportunity for movement from monetary or fiscal policy in South Africa 6.0 Turkey  It was foggy, but we didn’t have theIndustrial Production Growth (%) 4.0 Poland Mordor-like gloom that settled over Europe 2.0 Germany United Kingdom  Sigh of relief when 2012 drew to a close 0.0 and we moved into a slow, but promising Hungary (3.0) (2.0) (1.0) 0.0 1.0 2.0 3.0 4.0 new year (2.0) Czech Republic  Looking forward to improved sentiment France in Europe, an uptick in the housing (4.0) Italy market in the US and no threat of global apocalypse (6.0) (8.0) Spain (10.0) (12.0) GDP Growth (%) 3
  4. 4. Only moderate cold fronts expected  Are there any global downside risk factors expected for 2013?  Eurocrisis still persistent in 2013 with regional average growth expected to contract slightly  Many downside risks still present in Europe, even though policy actions have reduced some of these risks and financial conditions have improved for governments and banking institutions - investors Investor sentiment remain risk averse remains negative in EU Moderate uptick in US and risk averse toward (expected) emerging markets  Uptick in the US economy - growth in services sector (highly likely)LIKELIHOOD and a turnaround in housing markets which could support consumer growth  Relatively positive sentiment from the US Positive European Collapse of US growth (unlikely) economy (not likely) POSITIVE IMPACT NEGATIVE IMPACT 4
  5. 5. External factors will constrain the Reserve Bank  Food prices are expected to rise above historical average - US drought especially harsh  Greatest increases expected in fresh produce and meat  Housing, fuel and power prices also expected to remain under pressure Consumer expenditure not expected to feature strongly this year as a result of high household debt and budget pressures due to rising food and fuel costs Inflation will most likely peak at 6.5% by mid 2013 before recovering below 6.0% by the end of the year Leaves MPC little room to manoeuvre with rates expected to be unchanged for 2013 5
  6. 6. Local unrest may lead to a build-up of violent storms  Violent protest activity felt hard in mining, agriculture and transport sectors  Disruptions to both supply and demand-side of economy  Businesses do not operate in a vacuum - political climate has a major influence on consumers and supply chains Annual Protest Growth Rate 220 Growth trend shows major increase in 2013 Protest Growth Rate (%) 200 Major impacts: 180  Supply bottlenecks and demand pressure 160  Production losses 140  Investor sentiment, pressure on current 120 account and Rand volatility/weakness 100 2008 2009 2010 2011 2012 Source: Multi-Level Governmental Initiative and Frost & Sullivan Analysis 6
  7. 7. Key concerns and developments to look out for in 2013The skies are clearing for promising external growth conditions in the latter part of 2013 and into2014, however certain local pressures may constrain growth potential in the short to medium-term  Government debt and budgetary pressure Rising and deserves urgent attention  Investor sentiment Volatile and risk averse  Rand volatility Largely driven by sentiment and speculation, mostly weak Rand  Losses due to protest action Increasing trend, losses may be substantial  GDP Growth - 2.9% in 2013 Export growth, consumer expenditure moderate, unflattering investment prospects, mining & agriculture under pressure 7
  8. 8. Cloudy with a chance of rubber bullets Thank you 8
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