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2017 oecd-economic-survey-south-africa-presentation

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Presentation of the OECD 2017 Economic Survey of South Africa

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2017 oecd-economic-survey-south-africa-presentation

  1. 1. 2017 OECD ECONOMIC SURVEY OF SOUTH AFRICA Finding new ways to boost growth and job creation Pretoria, 24 July 2017 @OECD @OECDeconomy http://www.oecd.org/eco/surveys/economic-survey-south-africa.htm
  2. 2. • Short-run fiscal and monetary policies offer limited scope to boost growth. • Bold structural reforms are needed to increase access to network sectors and services. • Improving education access and quality, reducing the cost of energy and developing transport infrastructure can boost the economy. • Deepening regional integration in the SADC will expand market size and open new opportunities for growth. • Entrepreneurship is low compared to other emerging economies. • The environment for new and small businesses is more difficult than in other countries, but reducing red tape would create jobs. Main messages 2
  3. 3. South Africa performs well on some well- being dimensions 3 Source: OECD (2016), "Better Life Index 2016", OECD Social and Welfare Statistics (database). 0 2 4 6 8 10 Income and wealth Jobs and earnings Housing Work and life balance Health status Education and skillsSocial connections Civic engagement and governance Environmental quality Personal security Subjective well-being South Africa OECD emerging market average
  4. 4. Social transfers reduce inequality 4 Source: OECD Income distribution and poverty database (provisional). 0 10 20 30 40 50 60 70 80 Lowest Second Third Fourth Highest % Distribution of income and transfers by quintile, entire population, 2015 Share of income Share of transfers
  5. 5. 5 Growth has slowed GDP index, volume Source: OECD (2017), OECD Analytical Database. -2 0 2 4 6 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 %
  6. 6. 6 Unemployment is high Unemployment rate Source: OECD (2017), OECD Analytical Database. 15 20 25 30 35 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 %
  7. 7. Poverty remains high 7 Source: OECD Income distribution and poverty database (Provisional). 0 5 10 15 20 25 30 35 40 OECD RUS CHL MEX TUR ZAF % Poverty rate after taxes and transfers, 2015 or latest
  8. 8. Fiscal consolidation is limiting debt growth 8 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 0 10 20 30 40 50 60 70 80 90 100 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Government debt Gross loan debt (LHS) Interest payments (RHS) % GDP % GDP Source: National Treasury (2017), Budget Review 2017
  9. 9. Falling inflation would create more room to ease monetary policy 9 0 1 2 3 4 5 6 7 8 9 10 2009 2010 2011 2012 2013 2014 2015 2016 2017 Y-o-y inflation, % Core Headline Policy target Source: South African Reserve Bank
  10. 10. Regional integration is modest 10 Share of intra-regional exports out of total exports for all members Source: IMF, Direction of Trade Statistics; World Bank 0 5 10 15 20 25 30 35 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % of total exports ASEAN MERCOSUR ECOWAS SADC
  11. 11. Early-stage entrepreneurial activity is low 11 % of working-age population in entrepreneurial activity, 2014-16 average Source: Global Entrepreneurship Monitor. 0 5 10 15 20 25 30 MYS RUS ZAF HUN IND LTU CRI CHN EST LVA IDN ARG MEX THA BRA COL CHL
  12. 12. 12 Policy reforms to boost inclusive growth
  13. 13. The national minimum wage will reduce in- work poverty 13 0.0 0.2 0.4 0.6 0.8 1.0 1.2 RUS VNM IND ESP MEX CZE EST MYS SVK GRC LTU OECD POL LVA HUN ROU PRT SVN THA CHL ZAF(current) IDN CRI TUR COL ZAF(proposed) Minimum relative to median wages, 2015 or latest Source: OECD; ILO; World Bank.
  14. 14. More effective public spending will create fiscal space 14 0 2 4 6 8 10 12 14 16 Colombia Indonesia Chile Thailand Turkey Russia OECD Brazil South Africa % of GDP Compensation of general government employees, 2015 Source: IMF, Government Finance Statistics.
  15. 15. The cost of higher education has been increasing 15 0 5 10 15 20 25 30 35 2009 2010 2011 2012 2013 2014 Billion ZAR Government subsidy and university personnel costs Personnel costs Government subsidies Source: Department of Higher Education and Training (2016); OECD calculations.
  16. 16.  Set up an independent commission of experts to advise on minimum wage adjustments.  Develop apprenticeship and internship programmes to increase youth employment.  Limit annual wage increases in the public sector and redeploy civil servants to priority areas.  Deepen implementation of public procurement reform and enforce sanctions for breaches of the Public Financial Management Act.  Ensure that state-owned enterprises respect procurement and expenditure rules.  Set up a scheme of universal student loans contingent on future incomes, with participation from banks and government guarantees. Main recommendations 16
  17. 17. Deepen regional integration 17
  18. 18. Deeper regional integration would expand markets 18 Tariff rate, applied, weighted mean, all products, 2015 1. Numbers are for 2014. 2. Numbers are for 2013. Source: World Bank staff estimates using the World Integrated Trade Solution system. 0 2 4 6 8 10 12 Botswana Mauritius Namibia Seychelles Zambia(2) Mozambique(1) SouthAfrica Malawi Swaziland Zimbabwe Madagascar(1) Tanzania Lesotho Congo,Dem.(1) Angola Chile Mexico(1) Indonesia(2) Russia China India(2) Argentina Brazil Canada Japan EU UnitedStates %
  19. 19. Better trade facilitation is key 19 Trade facilitation index 0 1 2 3 4 5 6 Angola Congo,DR. Zimbabwe Tanzania Madagascar Mozambique Malawi Zambia MERCOSUR Lesotho Namibia Botswana SouthAfrica Mauritius EU OECD 1-7 (best) Source: World Economic Forum, Global Enabling Trade Report.
  20. 20. Customs procedures remain too complex 20 0 1 2 3 4 5 6 Angola Zimbabwe Madagascar Congo,Dem.Rep. Lesotho Malawi Swaziland Zambia Mozambique Tanzania Seychelles SouthAfrica Namibia Botswana Mauritius Venezuela Nicaragua Argentina Brazil Bolivia ElSalvador Honduras Guatemala Suriname Guyana Paraguay Colombia CostaRica Ecuador Mexico Peru DominicanRep. Uruguay Panama Chile PuertoRico SADC Latin America 1-7 (best) OECD average Burden of customs procedures Source: World Economic Forum, Global Competitiveness Report 2016-17.
  21. 21.  Reduce non-tariff barriers within South African Development Community (SADC).  Lead the harmonisation of competition rules among SADC countries and promote competition in infrastructure-related services across countries.  Simplify and adopt a single set of rules of origin in the forthcoming tripartite free trade area.  Provide special economic zones with better infrastructure and develop their linkages with local economies.  Upgrade information technology at custom posts and improve the interconnectivity of systems within SADC.  Create a regional fund for infrastructure and increase private sector participation in infrastructure projects. Main recommendations on regional integration 21
  22. 22. Boosting job creation through more start-ups and SME growth 22
  23. 23. It is key to remove red tape 23 0 10 20 30 40 50 60 70 80 90 EST LVA CHL TUR HUN OECD MEX RUS IDN IND CHN POL ZAF BRA Days Time required to start a business Source: World Bank (2017), Doing Business database.
  24. 24. Opening up access to professional services is important for start-ups 24 0 1 2 3 4 5 All professions Accounting Legal Architect Engineer 0-6 (most restrictive) Regulation in professional services ZAF Non-OECD EMEs OECD EMEs OECD average Note: The emerging market economies are 5 non-OECD member countries (Brazil, China, India, Russia and South Africa, with varying coverage) and 5 OECD members (Chile, Hungary, Mexico, Poland and Turkey). Data for 2013 or latest. Source: OECD, Product Market Regulation Statistics database.
  25. 25. Entrepreneurial competencies can be improved 25 Attitudes have become more entrepreneurial, 2014-16 Note: Non-OECD EME is the average of Argentina, Brazil, China, Colombia, Costa Rica, India, Indonesia, Malaysia, Thailand, Russia and South Africa. Source: Global Entrepreneurship Monitor. 0 10 20 30 40 50 60 70 80 Perceived capabilities Fear of failure rate Know start-up entrepreneur rate Entrepreneurship as desirable career choice OECD ZAF Non-OECD EME
  26. 26.  Enact a package of reforms to reduce red tape.  Introduce a “silence is consent rule” for licensing procedures that have low associated risks. Systematically review and reduce the stock of red tape and licensing requirements.  Open up telecommunications, energy, transport and services sectors to competition.  Evaluate and streamline financial and non-financial support for start-ups and small businesses.  Expand second-chance programmes for early school leavers.  Increase entrepreneurial education and work placements in the post-school education system. Main recommendations on entrepreneurship and SMEs 26
  27. 27. 27 For more information http://www.oecd.org/eco/surveys/economic-survey-south-africa.htm @OECD @OECDeconomy

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