South Africa
Economic Overview & Prospects
2013 and beyond
August 2013
The key ingredients
• Rising fixed investment activity
• Increased employment
A growing economy:
• Rising disposable incom...
2
02 September 2013
SA economy is growing, but also increasing running out
of fuel
The economy is struggling to gain momentum because some key
sectors are not performing
3
02 September 2013
Manufacturing
h...
So what is troubling producers:
• Recession in the Eurozone
• Growth in China is moderating
A sluggish & patchy world econ...
So the private sector has been reluctant to expand
capacity
5
02 September 2013
And they have been equally hesitant to expand their
labour force
6
02 September 2013
Most private industries have not created any new jobs
since 2008
7
02 September 2013
Government consumption expenditure is still driving
growth, but is not sustainable
8
02 September 2013
Because government ran out of funds some four years
ago
9
02 September 2013
And the world has taken note
■ Ratings downgrades
■ Moody’s A3 to Baa on 27
September with negative outlook
■Lack of insti...
11
02 September 2013
Growth in the total wage bill will be contained
12
02 September 2013
So growth in disposable income is slowing
13
02 September 2013
And households are still too indebted & vulnerable
General government is at least accelerating spending on
social infrastructure
14
02 September 2013
15
02 September 2013
The SARB’s problem is that growth is modest, but
becoming increasingly unsustainable
Source: SARB QB ...
The good news is that we are still getting the capital
inflows we need, but much depends on government
16
02 September 2013
…which undermines the rand and fuels inflation
17
02 September 2013
But overall the subdued growth rate will probably set the
tone for some time to come, keeping interest rates flat
18
02 Se...
Forecasts
2008 2009 2010 2011 2012 2013 2014 2015
Economic growth - Annual growth rates (%)
Consumer spending 2.2 -1.6 4.4...
The end, thank you, and good luck
20
02 September 2013
21
02 September 2013
And the plans for next three years remain ambitious
22
02 September 2013
Weak exports are still a major constraints on both
confidence and performance on the production side
...
23
02 September 2013
On balance, 2013 is expected to be very similar to 2012
Source: IMF WEO July 2013
Countries and regio...
24
02 September 2013
Hugely unsustainable public sector debt will continue to constrain
economic growth in the Eurozone an...
25
02 September 2013
SA highly exposed to the weakest spot in the world economy –
the Eurozone
Agriculture: 37%
Manufactur...
And central banks are doing their best to push liquidity – especially in
Japan where “Abenomics” has taken hold
27
02 September 2013
Softer growth forecasts have hurt international commodity prices
Source: INET
The gold price has been under huge pressure
28
02 September 2013
Global food prices are easing
29
02 September 2013
But global oil prices have remained sticky on account of
the troubles in Egypt and Syria
30
02 September 2013
31
02 September 2013
Growth in domestic spending is increasingly artificial
Source: SARB QB June 2012
Difficult conditions for producers have implications for
capital expenditure
32
02 September 2013
33
02 September 2013
In advanced economies, conditions remain weak and mixed
34
02 September 2013
But it is really the sharper than expected slowdown in
emerging markets that are behind the downward ...
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Retail indaba august 2013

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Retail indaba august 2013

  1. 1. South Africa Economic Overview & Prospects 2013 and beyond August 2013
  2. 2. The key ingredients • Rising fixed investment activity • Increased employment A growing economy: • Rising disposable income • Rising household wealth • Growing confidence • Increased willingness to lend and borrow • Increased willingness to spend Rising employment 1 02 September 2013
  3. 3. 2 02 September 2013 SA economy is growing, but also increasing running out of fuel
  4. 4. The economy is struggling to gain momentum because some key sectors are not performing 3 02 September 2013 Manufacturing has fared better but not great This sector is holding the whole economy back Mining is in the doldrums
  5. 5. So what is troubling producers: • Recession in the Eurozone • Growth in China is moderating A sluggish & patchy world economy: • Run away electricity costs (2007-2012: +230%) • Rising unit labour costs (above-inflation wage growth, fading productivity, more & violent strikes) • Insufficient power, transport, logistics infrastructure • Poor service delivery, red tape, corruption Surging production costs 4 02 September 2013
  6. 6. So the private sector has been reluctant to expand capacity 5 02 September 2013
  7. 7. And they have been equally hesitant to expand their labour force 6 02 September 2013
  8. 8. Most private industries have not created any new jobs since 2008 7 02 September 2013
  9. 9. Government consumption expenditure is still driving growth, but is not sustainable 8 02 September 2013
  10. 10. Because government ran out of funds some four years ago 9 02 September 2013
  11. 11. And the world has taken note ■ Ratings downgrades ■ Moody’s A3 to Baa on 27 September with negative outlook ■Lack of institutional strength ■Shrinking fiscal space ■Negative investment climate due to infrastructure shortfalls, high labour costs despite high unemployment and increased concerns over future political stability ■ S&P BBB from BBB+ on 12 October, negative outlook ■More emphasis on social tensions spilling over into worse forecasts
  12. 12. 11 02 September 2013 Growth in the total wage bill will be contained
  13. 13. 12 02 September 2013 So growth in disposable income is slowing
  14. 14. 13 02 September 2013 And households are still too indebted & vulnerable
  15. 15. General government is at least accelerating spending on social infrastructure 14 02 September 2013
  16. 16. 15 02 September 2013 The SARB’s problem is that growth is modest, but becoming increasingly unsustainable Source: SARB QB June 2012
  17. 17. The good news is that we are still getting the capital inflows we need, but much depends on government 16 02 September 2013
  18. 18. …which undermines the rand and fuels inflation 17 02 September 2013
  19. 19. But overall the subdued growth rate will probably set the tone for some time to come, keeping interest rates flat 18 02 September 2013
  20. 20. Forecasts 2008 2009 2010 2011 2012 2013 2014 2015 Economic growth - Annual growth rates (%) Consumer spending 2.2 -1.6 4.4 4.8 3.5 2.7 3.2 3.5 Fixed investment 13.0 -4.3 -2.0 4.5 5.7 4.9 5.2 6.2 Exports 1.8 -19.5 4.5 5.9 0.1 2.7 4.2 4.5 Imports 1.5 -17.4 9.6 9.7 6.3 7.8 6.8 7.0 GDP 3.6 -1.5 3.1 3.5 2.5 2.0 3.1 3.4 Balance of Payments Current Account (R'bn) -161.9 -97.1 -75.0 -98.8 -197.6 -234.1 -236.1 -237.7 As % of gdp -7.2 -4.0 -2.8 -3.4 -6.3 -6.9 -6.3 -5.8 Interest rates - Year-end rates 3-month JIBAR 11.5 7.3 5.7 5.7 5.1 5.2 6.3 7.7 Prime 15.0 10.5 9.0 9.0 8.5 8.5 9.5 11.0 Long bond 7.3 9.1 8.1 8.1 6.8 7.7 8.3 7.2 Exchange rates - Annual averages Rand/US$ 8.26 8.44 7.33 7.30 8.21 9.75 10.14 10.38 Rand/Euro 12.10 11.75 9.76 10.20 10.62 12.68 13.19 13.69 Yen/Rand 12.51 11.08 11.97 10.91 9.75 10.05 10.10 10.07 Inflation - Annual averages New CPI 11.3 7.1 4.3 5.0 5.7 5.9 5.8 5.9
  21. 21. The end, thank you, and good luck 20 02 September 2013
  22. 22. 21 02 September 2013 And the plans for next three years remain ambitious
  23. 23. 22 02 September 2013 Weak exports are still a major constraints on both confidence and performance on the production side Source: SARB QB June 2012
  24. 24. 23 02 September 2013 On balance, 2013 is expected to be very similar to 2012 Source: IMF WEO July 2013 Countries and regions Forecasts Forecasts July 2013 April 2013 2008 2009 2010 2011 2012 2013 2014 2013 2014 2015 2016 World 2.8 -0.6 5.2 3.9 3.1 3.1 3.8 3.3 4.0 4.4 4.5 Advanced economies 0.1 -3.5 3.0 1.7 1.2 1.2 2.1 1.2 2.2 2.6 2.6 US -0.3 -3.1 2.4 1.8 2.2 1.7 2.7 1.9 3.0 3.6 3.4 Japan -1.0 -5.5 4.7 -0.6 1.9 2.0 1.2 1.6 1.4 1.1 1.2 Euro area 0.4 -4.4 2.0 1.5 -0.6 -0.6 0.9 -0.3 1.1 1.4 1.6 Germany 0.8 -5.1 4.0 3.1 0.9 0.3 1.3 0.6 1.5 1.3 1.3 UK -1.0 -4.0 1.8 1.0 0.3 0.9 1.5 0.7 1.5 1.8 1.9 Emerging and developing 6.1 2.7 7.6 6.2 4.9 5.0 5.4 5.3 5.7 6.0 6.1 Developing Asia 7.9 6.9 10.0 7.8 6.5 6.9 7.0 7.1 7.3 7.6 7.7 China 9.6 9.2 10.4 9.3 7.8 7.8 7.7 8.0 8.2 8.5 8.5 India 6.2 5.0 11.2 6.3 3.2 5.6 6.3 5.7 6.2 6.6 6.9 Middle East and N Africa 5.2 3.0 5.5 3.9 4.4 3.1 3.7 3.1 3.7 4.5 4.6 Sub-Saharan Africa 5.6 2.7 5.4 5.4 4.9 5.1 5.9 5.6 6.1 5.9 5.7 South Africa 3.6 -1.5 3.1 3.5 2.5 2.0 2.9 2.8 3.3 3.4 3.3 Angola 13.8 2.4 3.4 3.9 8.4 7.0 6.7 6.2 7.3 7.0 6.7 Nigeria 6.0 7.0 8.0 7.4 6.3 7.0 7.0 7.2 7.0 7.0 7.0 Zimbabwe -17.8 8.9 9.6 10.6 4.4 5.5 5.5 5.0 5.7 5.5 5.5 Namibia 3.4 -1.1 6.6 4.8 4.0 4.3 4.3 4.2 4.0 4.3 4.3 Latin America 4.2 -1.5 6.1 4.6 3.0 3.0 3.4 3.4 3.9 3.9 3.9 Brazil 5.2 -0.3 7.5 2.7 0.9 2.5 3.2 3.0 4.0 4.1 4.2 Mexico 1.2 -6.0 5.3 3.9 3.9 2.9 3.2 3.4 3.4 3.3 3.3 Central & Eastern Europe 3.1 -3.6 4.6 5.4 1.4 2.2 2.8 2.2 2.8 3.3 3.6 Russia 5.2 -7.8 4.5 4.3 3.4 2.5 3.3 3.4 3.8 3.7 3.6
  25. 25. 24 02 September 2013 Hugely unsustainable public sector debt will continue to constrain economic growth in the Eurozone and most advanced economies Source: IMF WEO Oct 2012
  26. 26. 25 02 September 2013 SA highly exposed to the weakest spot in the world economy – the Eurozone Agriculture: 37% Manufacturing: 24.7% Mining: 19.5%
  27. 27. And central banks are doing their best to push liquidity – especially in Japan where “Abenomics” has taken hold
  28. 28. 27 02 September 2013 Softer growth forecasts have hurt international commodity prices Source: INET
  29. 29. The gold price has been under huge pressure 28 02 September 2013
  30. 30. Global food prices are easing 29 02 September 2013
  31. 31. But global oil prices have remained sticky on account of the troubles in Egypt and Syria 30 02 September 2013
  32. 32. 31 02 September 2013 Growth in domestic spending is increasingly artificial Source: SARB QB June 2012
  33. 33. Difficult conditions for producers have implications for capital expenditure 32 02 September 2013
  34. 34. 33 02 September 2013 In advanced economies, conditions remain weak and mixed
  35. 35. 34 02 September 2013 But it is really the sharper than expected slowdown in emerging markets that are behind the downward revisions
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