World economy under pressure: implications for South Africa                                 Kevin Lings                   ...
Euro-area GDP index (real) Index Q1 2006 = 10010810710610510410310210110099      2006                  2007               ...
Germany, France and Italy GDP growth%y/y6.05.04.0                                                         Germany3.0      ...
Euro-area economic sentiment Index 120                                    Germany 110 100                                 ...
Euro-area unemployment rate       %11.511.010.5                                          Euro-area10.0 9.5 9.0 8.5 8.0 7.5...
Euro-area government debt as % of GDP      %1751501251007550                                                            Sp...
Italy 2-year government bond yield%, yield, daily 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0       2010  ...
Spain 2-year government bond yield%, yield, daily  7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0       2010         ...
Government expenditure as % of GDP                Europe  France                 56.3  Denmark                56.0  Belgiu...
US GDP$ trillion, constant prices  13.6  13.5  13.4  13.3  13.2  13.1  13.0  12.9  12.8  12.7  12.6  12.5         2006    ...
US real GDP growth %q/q   6   4   2   0  -2  -4  -6  -8 -10        2004               2005                      2006      ...
2012                                    2011                                    2010                                    20...
US retail sales%y/y, nominal     10      8      6                US retail sales      4                                   ...
US consumer confidence   Index 160 140 120 100  80  60  40  20       85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02...
US fiscal cliff at end 2012 Tax benefits that are set to expire end 2012       $bn Bush tax cuts, middle income earners   ...
US house pricesUS House prices,%, m/m, nominal, S&P Case Shiller    1.5    1.0    0.5    0.0    -0.5    -1.0    -1.5    -2...
US housing startsThousands, sa225021502050                            Housing starts19501850175016501550145013501250115010...
China growth in GDP and industrial production%y/y                                                                 %y/y    ...
China exports % y/y, 3mnth ave 50 40 30 20 10  0-10-20-30   2003    2004     2005   2006   2007   2008   2009   2010   201...
China growth in bank loans %y/y 35 32 29 26 23 20 17 14 11  8  5      2006             2007                     2008      ...
US and Euro-area consumer inflation%    4.0                                             US    3.5    3.0    2.5           ...
China, Brazil, Russia consumer inflation%    16.0    14.0    12.0    10.0                              Russia     8.0     ...
South Africa consumer inflation % y/y 14 12 10  8  6  4  2  0      2006   2007    2008     2009   2010   2011   2012
Global consumer inflation rate  %y/y                           %y/y
2012                                                                             2011                                     ...
Global interest rates %                                                %                        Emerging markets (rhs)    ...
US real interest rates  Percentage points (Fed funds rate less core consumer inflation)4.53.52.51.50.5-0.5-1.5-2.5       1...
South Africa real interest ratesPercentage points (Repo rates less consumer inflation)6.05.04.03.02.01.00.0-1.0       06  ...
South Africa household deposits R billion465455445435                            +R74bn425415405395385375      2010       ...
South Africa growth in household deposits%y/y13121110 9 8 7 6 5 4 3       2011              F                  M          ...
SA GDP back well above previous highsRand billion, constant prices 1950 1900 1850 1800 1750 1700 1650 1600        2006    ...
Q2 2012                                                                                                                   ...
SA non-financial corporate depositsR billion 550 500 450 400 350 300 250       2006              2007                     ...
South Africa equity market index Index, daily370003500033000310002900027000                                              +...
30                    55                         80                              105                                    13...
Net foreign purchases of South African bondsR billion, cumulative220200                                                   ...
South Africa 10-year government bond yield %, yield, daily 10.0  9.5  9.0  8.5  8.0  7.5  7.0  6.5  6.0        2010       ...
US Federal Reserve quantitative easing$ billion220020501900175016001450130011501000  850  700  550  400  250  100  -50    ...
US 10-year government bond yield%, yield, daily   4.5   4.0   3.5   3.0   2.5   2.0   1.5   1.0         2010              ...
US corporate cash on balance % of GDP9.89.59.39.08.88.58.38.07.87.57.37.0      2002             2003                    20...
US S&P 500 equity indexIndex, daily 1700 1600 1500 1400 1300 1200 1100 1000   900                                         ...
SA leading indicator %y/y  25  20                       SA leading indicator, %y/y  15  10   5   0  -5 -10 -15 -20       2...
SA consumer spending vs disposable income%, q/q, 4-quarter moving avearge, real 10  9                     Consumer spendin...
SA exports to Europe R billion, 6-month moving average16.515.514.513.512.511.5       2009                                 ...
Government revenue and expenditure as % of GDP  % 35 34                                                   Fiscal years 33 ...
Government salary paymentsBillions 400                                                                +6.4% per annum 360 ...
Increase in the spending on social grants%y/y 13 12 11 10  9  8  7  6  5        2009/10                  2010/11          ...
Public sector infrastructural spending Rbn                                                                                ...
World corruption perception index: South AfricaWorld ranking  65  60  55  50  45  40           2005                  2006 ...
Transnet capital expenditure(R300bn over 7yrs)Rbn                        Create 588 000 direct and in-direct job opportuni...
Transnet capacity creation projects● Iron ore export railway line expansion to 82.5m tons, up from 43m● Coal railway line ...
SA non-financial corporate depositsR billion 550 500 450 400 350 300 250       2006              2007                     ...
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Stanlib Presentation. World economy under pressure.

  1. 1. World economy under pressure: implications for South Africa Kevin Lings Economist STANLIB
  2. 2. Euro-area GDP index (real) Index Q1 2006 = 10010810710610510410310210110099 2006 2007 2008 2009 2010 2011 2012
  3. 3. Germany, France and Italy GDP growth%y/y6.05.04.0 Germany3.0 France2.01.00.0-1.0-2.0 Italy-3.0-4.0-5.0-6.0-7.0-8.0 2006 2007 2008 2009 2010 2011 2012
  4. 4. Euro-area economic sentiment Index 120 Germany 110 100 France 90 Spain Italy 80 Greece 70 05 06 07 08 09 10 11 12
  5. 5. Euro-area unemployment rate %11.511.010.5 Euro-area10.0 9.5 9.0 8.5 8.0 7.5 7.0 04 05 06 07 08 09 10 11 12
  6. 6. Euro-area government debt as % of GDP %1751501251007550 Spain Italy Germany Euro-area Ireland Portugal France Greece
  7. 7. Italy 2-year government bond yield%, yield, daily 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 2010 2011 2012
  8. 8. Spain 2-year government bond yield%, yield, daily 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 2010 2011 2012
  9. 9. Government expenditure as % of GDP Europe France 56.3 Denmark 56.0 Belgium 53.5 Italy 50.0 Emerging markets 28.5 Netherlands 50.0 Greece 49.7 Portugal 48.7 Germany 45.6 Spain 43.6 Euro-area 49.4
  10. 10. US GDP$ trillion, constant prices 13.6 13.5 13.4 13.3 13.2 13.1 13.0 12.9 12.8 12.7 12.6 12.5 2006 2007 2008 2009 2010 2011 2012
  11. 11. US real GDP growth %q/q 6 4 2 0 -2 -4 -6 -8 -10 2004 2005 2006 2007 2008 2009 2010 2011 2012
  12. 12. 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994US leading indicator 1993 1992 1991 1990 1989 1988 1987 12 10 8 6 4 2 0 -2 -4 -6 -8 -10 -12 -14 -16 -18 -20 %y/y
  13. 13. US retail sales%y/y, nominal 10 8 6 US retail sales 4 3-month ave 2 0 -2 -4 -6 -8 -10 -12 06 07 08 09 10 11 12
  14. 14. US consumer confidence Index 160 140 120 100 80 60 40 20 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
  15. 15. US fiscal cliff at end 2012 Tax benefits that are set to expire end 2012 $bn Bush tax cuts, middle income earners 182 Bush tax cuts, high income earners 56 Unemployment insurance 34 Payroll tax cut 109 Alternative Minimum Tax 132 Affordable Care Act 27 Total 540 Debt ceiling debacle will result in automatic spending cut-backs
  16. 16. US house pricesUS House prices,%, m/m, nominal, S&P Case Shiller 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0 -2.5 06 07 08 09 10 11 12
  17. 17. US housing startsThousands, sa225021502050 Housing starts1950185017501650155014501350125011501050 950 850 750 650 550 450 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
  18. 18. China growth in GDP and industrial production%y/y %y/y GDP (lhs) Industrial production (rhs)
  19. 19. China exports % y/y, 3mnth ave 50 40 30 20 10 0-10-20-30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  20. 20. China growth in bank loans %y/y 35 32 29 26 23 20 17 14 11 8 5 2006 2007 2008 2009 2010 2011 2012
  21. 21. US and Euro-area consumer inflation% 4.0 US 3.5 3.0 2.5 Euro-area 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0 2009 2010 2011 2012
  22. 22. China, Brazil, Russia consumer inflation% 16.0 14.0 12.0 10.0 Russia 8.0 Brazil 6.0 4.0 China 2.0 0.0 -2.0 2009 2010 2011 2012
  23. 23. South Africa consumer inflation % y/y 14 12 10 8 6 4 2 0 2006 2007 2008 2009 2010 2011 2012
  24. 24. Global consumer inflation rate %y/y %y/y
  25. 25. 2012 2011 2010 2009 2008 2007 2006 2005 2004US corn price (Chicago) 2003 2002 2001 $ per bushel 2000 9 8 7 6 5 4 3 2 1
  26. 26. Global interest rates % % Emerging markets (rhs) Developed markets (lhs)
  27. 27. US real interest rates Percentage points (Fed funds rate less core consumer inflation)4.53.52.51.50.5-0.5-1.5-2.5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  28. 28. South Africa real interest ratesPercentage points (Repo rates less consumer inflation)6.05.04.03.02.01.00.0-1.0 06 07 08 09 10 11 12
  29. 29. South Africa household deposits R billion465455445435 +R74bn425415405395385375 2010 2011 2012
  30. 30. South Africa growth in household deposits%y/y13121110 9 8 7 6 5 4 3 2011 F M A M J J A S O N D 2012 F M A M
  31. 31. SA GDP back well above previous highsRand billion, constant prices 1950 1900 1850 1800 1750 1700 1650 1600 2006 2007 2008 2009 2010 2011 2012
  32. 32. Q2 2012 Q1 2012 Still 580 000 below the previous peak Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009SA total employment Q1 2009 Q4 2008 Q3 2008 Q2 2008 Million Q1 2008 14.2 14.0 13.8 13.6 13.4 13.2 13.0 12.8
  33. 33. SA non-financial corporate depositsR billion 550 500 450 400 350 300 250 2006 2007 2008 2009 2010 2011 2012
  34. 34. South Africa equity market index Index, daily370003500033000310002900027000 +95%2500023000210001900017000 2006 2007 2008 2009 2010 2011 2012
  35. 35. 30 55 80 105 130 155 Greece % Italy Ireland Portugal US Government debt as % of GDP Euro-area Spain UK France GermanySouth Africa
  36. 36. Net foreign purchases of South African bondsR billion, cumulative220200 +R156bn180160140120 Bonds100 80 60 40 20 0-20 2004 2005 2006 2007 2008 2009 2010 2011 2012
  37. 37. South Africa 10-year government bond yield %, yield, daily 10.0 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 2010 2011 2012
  38. 38. US Federal Reserve quantitative easing$ billion220020501900175016001450130011501000 850 700 550 400 250 100 -50 2008 2009 2010 2011 2012
  39. 39. US 10-year government bond yield%, yield, daily 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 2010 2011 2012
  40. 40. US corporate cash on balance % of GDP9.89.59.39.08.88.58.38.07.87.57.37.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  41. 41. US S&P 500 equity indexIndex, daily 1700 1600 1500 1400 1300 1200 1100 1000 900 +107% 800 700 600 2006 2007 2008 2009 2010 2011 2012
  42. 42. SA leading indicator %y/y 25 20 SA leading indicator, %y/y 15 10 5 0 -5 -10 -15 -20 2006 2007 2008 2009 2010 2011 2012
  43. 43. SA consumer spending vs disposable income%, q/q, 4-quarter moving avearge, real 10 9 Consumer spending 8 Consumer income 7 6 5 4 3 2 1 0 -1 -2 -3 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  44. 44. SA exports to Europe R billion, 6-month moving average16.515.514.513.512.511.5 2009 2010 2011 2012
  45. 45. Government revenue and expenditure as % of GDP % 35 34 Fiscal years 33 32 31 Expenditure as % of GDP 30 29 28 27 26 Revenue as % of GDP 25 24 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
  46. 46. Government salary paymentsBillions 400 +6.4% per annum 360 320 +16.0% per annum 280 240 200 160 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
  47. 47. Increase in the spending on social grants%y/y 13 12 11 10 9 8 7 6 5 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
  48. 48. Public sector infrastructural spending Rbn R844.5bn 350 Public sector only spent 68% of budget 300 250 200 150 284.6 297.6 262.3 226.6 100 193.0 203.6 177.8 130.2 50 83.6 70.7 0 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
  49. 49. World corruption perception index: South AfricaWorld ranking 65 60 55 50 45 40 2005 2006 2007 2008 2009 2010 2011
  50. 50. Transnet capital expenditure(R300bn over 7yrs)Rbn Create 588 000 direct and in-direct job opportunities6055504540353025201510 5 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
  51. 51. Transnet capacity creation projects● Iron ore export railway line expansion to 82.5m tons, up from 43m● Coal railway line expansion to 97.5m tons, up from 65m● Increase export manganese exports to 12m tons from 5m tons● General rail freight capacity from 79.7m tons to 170.2m tons● Container terminal at Coega● Cape Town container port expansion● Durban container port terminal berth deepening● Transnet multi purpose product pipeline
  52. 52. SA non-financial corporate depositsR billion 550 500 450 400 350 300 250 2006 2007 2008 2009 2010 2011 2012
  53. 53. Thank you

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