This document summarizes Pravin Gordhan's presentation to the Business Forum South Africa on August 30, 2013. The presentation discusses the global economic outlook, noting slowing growth in emerging markets and a three-speed global recovery with the Eurozone in recession and growth in the US and emerging markets. It then analyzes growth dynamics in various regions and countries, highlighting challenges in China, other emerging markets, and specifically in South Africa. The presentation concludes by reviewing South Africa's achievements since 1994, including economic and social progress.
The global economy is expected to continue expanding at a moderate pace over the coming two years, but policymakers must ensure that instability in financial markets and underlying fragility in major economies are not allowed to derail growth, according to the OECD’s latest Economic Outlook.
This report draws on over 10,000 interviews with business leaders as well as economic forecast data to better understand the growth opportunities and challenges facing dynamic companies over the next 12 months.
Despite a bumpy ride throughout 2014, the US economy gained pace while the US equity and fixed income markets outperformed most markets around the world. This performance came with higher market volatility in the US, a rallying dollar, slowing economies in Europe and Asia, and rising geopolitical tensions, including conflicts in Ukraine and the Middle East.
The Dow Jones Industrial Average rose for the sixth straight year, posting a 7.52% gain (price-only return). The S&P 500 Index rose 13.69% (including reinvested dividends), marking the third straight year in which the benchmark has returned more than 10%. The Dow closed at a record high on 38 calendar days, while the S&P 500 had 53 record closes. The non-US markets followed a much different track: All major indices logged negative performance for the year (in USD). The MSCI EAFE Index had a -4.90% return and the MSCI Emerging Markets Index a -2.19% return (net dividends, in USD). The dollar’s strong performance relative to major regional currencies contributed significantly to the lower returns for US investors.
Government bond yields fell across major markets, including the US, where many expected higher rates in response to improving economic growth and an eventual rate increase due to the end of quantitative easing by the Federal Reserve. The yield on the 10-year Treasury note declined to 2.17% by year-end, down from 3.03% in 2013, with lower prices boosting its return to over 4.0% for the year. The Barclays US Government Bond Index returned 4.92%. World government bonds had slightly positive returns: The Citigroup World Government Bond 1–5 Year Index (hedged) returned 1.90%.
The global economy is expected to continue expanding at a moderate pace over the coming two years, but policymakers must ensure that instability in financial markets and underlying fragility in major economies are not allowed to derail growth, according to the OECD’s latest Economic Outlook.
This report draws on over 10,000 interviews with business leaders as well as economic forecast data to better understand the growth opportunities and challenges facing dynamic companies over the next 12 months.
Despite a bumpy ride throughout 2014, the US economy gained pace while the US equity and fixed income markets outperformed most markets around the world. This performance came with higher market volatility in the US, a rallying dollar, slowing economies in Europe and Asia, and rising geopolitical tensions, including conflicts in Ukraine and the Middle East.
The Dow Jones Industrial Average rose for the sixth straight year, posting a 7.52% gain (price-only return). The S&P 500 Index rose 13.69% (including reinvested dividends), marking the third straight year in which the benchmark has returned more than 10%. The Dow closed at a record high on 38 calendar days, while the S&P 500 had 53 record closes. The non-US markets followed a much different track: All major indices logged negative performance for the year (in USD). The MSCI EAFE Index had a -4.90% return and the MSCI Emerging Markets Index a -2.19% return (net dividends, in USD). The dollar’s strong performance relative to major regional currencies contributed significantly to the lower returns for US investors.
Government bond yields fell across major markets, including the US, where many expected higher rates in response to improving economic growth and an eventual rate increase due to the end of quantitative easing by the Federal Reserve. The yield on the 10-year Treasury note declined to 2.17% by year-end, down from 3.03% in 2013, with lower prices boosting its return to over 4.0% for the year. The Barclays US Government Bond Index returned 4.92%. World government bonds had slightly positive returns: The Citigroup World Government Bond 1–5 Year Index (hedged) returned 1.90%.
Global growth is moderatng as the recovery in trade
and manufacturing actvity loses steam. Despite
ongoing negotatons, trade tensions among major
economies remain elevated. These tensions, combined
with concerns about sofening global growth prospects, have weighed on investor sentment and contributed to
declines in global equity prices. Borrowing costs for
emerging market and developing economies (EMDEs)
have increased, in part as major advanced-economy
central banks contnue to withdraw policy
accommodaton in varying degrees. A strengthening
U.S. dollar, heightened financial market volatlity, and
rising risk premiums have intensified capital outlow
and currency pressures in some large EMDEs, with
some vulnerable countries experiencing substantal
financial stress. Energy prices have fluctuated markedly,
mainly due to supply factors, with sharp falls toward
the end of 2018. Economic actvity in the Euro Area has
been somewhat weaker than previously expected,
owing to slowing net exports. EMDE growth edged
down to an estmated 4.2 percent in 2018 as a number
of countries with elevated current account deficits
experienced substantal financial market pressures and
appreciable slowdowns in actvity. In low-income
countries (LICs), growth is firming as infrastructure
investment contnues and easing drought conditons
support a rebound in agricultural output.
Political risk outlook investment pack - March 2015Damian Karmelich
A leadership crisis in Australia, rising food prices across Asia and Russia’s search for security are all shaping markets. The Political Monitor Political Risk Outlook Investment Pack examines these issues and more, including:
Australian Political Risk Index - examines how recent political events have unnerved investors
- State in focus: a change of government in the resource rich state of Queensland
- The impact of rising food prices in Asia
- Countries in focus: Indonesia, Philippines and Viet Nam
- Global outlook - how events in the EU and Russia are shaping markets.
Global economies are witnessing two-speed recovery with the US economy showing firm signs of recovery, while growth in Euro Area still languishing in sub-optimal territory. Among the Asian economies, growth in Japan and China too continues to remain tepid. We discuss this in detail in the section on Global Trends in this month’s issue of Economy Matters. In the section on Domestic Trends, we analyze that the economic condition in the present scenario is in greater disarray than it was during the breakout of the global financial crisis of 2008-09, when both government as well as the RBI were quick to respond to the challenges and brought the economy back to recovery path within no time. In Corporate Performance, we examine the sectoral performance in the last fiscal in order to find the sectors which were badly hit in the wake of the current bout of economic crisis. The Sectoral spotlight for this issue is on Agriculture, a traditionally important sector of the Indian economy because of its enormous contribution in being the provider of basic source of livelihood to the most of the population in India. However in the recent past various challenges such as low agricultural yield, declining share of public investment, and lack of technological advancements have plagued the sector. We discuss the sector’s challenges and suggest measures to bolster its output. In the Special Article, we discuss India's deteriorating external position in the last few years, manifesting itself in a steady deterioration in the current account which slipped from a surplus at the start of the last decade to a huge deficit of 4.8 per cent in 2012-13. Bulk of the deterioration in current account is attributable to the sharp rise in merchandise trade deficit over the last decade. Ultimately, for India to contain its current account deficit at a more sustainable level of 2.0-2.5 per cent of GDP, it is essential that we ensure competitiveness of our goods and services, so that our imports are contained and exports boosted.
Political risk outlook investment pack - March 2014 - slideshareDamian Karmelich
The Political Monitor monthly political risk outlook pack examines key political trends and events likely to shape markets in the month ahead. It includes political risk scores, indices and analysis of the interplay between politics & markets.
This monthly briefing highlights that emerging economies face renewed financial turbulence, that US economy registered robust GDP growth in the fourth quarter of 2013 and that the last quarter of 2013 revealed a heterogeneous economic performance in the developing world.
For more information:
http://www.un.org/en/development/desa/policy/wesp/wesp_mb.shtml
Global growth is moderatng as the recovery in trade
and manufacturing actvity loses steam. Despite
ongoing negotatons, trade tensions among major
economies remain elevated. These tensions, combined
with concerns about sofening global growth prospects, have weighed on investor sentment and contributed to
declines in global equity prices. Borrowing costs for
emerging market and developing economies (EMDEs)
have increased, in part as major advanced-economy
central banks contnue to withdraw policy
accommodaton in varying degrees. A strengthening
U.S. dollar, heightened financial market volatlity, and
rising risk premiums have intensified capital outlow
and currency pressures in some large EMDEs, with
some vulnerable countries experiencing substantal
financial stress. Energy prices have fluctuated markedly,
mainly due to supply factors, with sharp falls toward
the end of 2018. Economic actvity in the Euro Area has
been somewhat weaker than previously expected,
owing to slowing net exports. EMDE growth edged
down to an estmated 4.2 percent in 2018 as a number
of countries with elevated current account deficits
experienced substantal financial market pressures and
appreciable slowdowns in actvity. In low-income
countries (LICs), growth is firming as infrastructure
investment contnues and easing drought conditons
support a rebound in agricultural output.
Political risk outlook investment pack - March 2015Damian Karmelich
A leadership crisis in Australia, rising food prices across Asia and Russia’s search for security are all shaping markets. The Political Monitor Political Risk Outlook Investment Pack examines these issues and more, including:
Australian Political Risk Index - examines how recent political events have unnerved investors
- State in focus: a change of government in the resource rich state of Queensland
- The impact of rising food prices in Asia
- Countries in focus: Indonesia, Philippines and Viet Nam
- Global outlook - how events in the EU and Russia are shaping markets.
Global economies are witnessing two-speed recovery with the US economy showing firm signs of recovery, while growth in Euro Area still languishing in sub-optimal territory. Among the Asian economies, growth in Japan and China too continues to remain tepid. We discuss this in detail in the section on Global Trends in this month’s issue of Economy Matters. In the section on Domestic Trends, we analyze that the economic condition in the present scenario is in greater disarray than it was during the breakout of the global financial crisis of 2008-09, when both government as well as the RBI were quick to respond to the challenges and brought the economy back to recovery path within no time. In Corporate Performance, we examine the sectoral performance in the last fiscal in order to find the sectors which were badly hit in the wake of the current bout of economic crisis. The Sectoral spotlight for this issue is on Agriculture, a traditionally important sector of the Indian economy because of its enormous contribution in being the provider of basic source of livelihood to the most of the population in India. However in the recent past various challenges such as low agricultural yield, declining share of public investment, and lack of technological advancements have plagued the sector. We discuss the sector’s challenges and suggest measures to bolster its output. In the Special Article, we discuss India's deteriorating external position in the last few years, manifesting itself in a steady deterioration in the current account which slipped from a surplus at the start of the last decade to a huge deficit of 4.8 per cent in 2012-13. Bulk of the deterioration in current account is attributable to the sharp rise in merchandise trade deficit over the last decade. Ultimately, for India to contain its current account deficit at a more sustainable level of 2.0-2.5 per cent of GDP, it is essential that we ensure competitiveness of our goods and services, so that our imports are contained and exports boosted.
Political risk outlook investment pack - March 2014 - slideshareDamian Karmelich
The Political Monitor monthly political risk outlook pack examines key political trends and events likely to shape markets in the month ahead. It includes political risk scores, indices and analysis of the interplay between politics & markets.
This monthly briefing highlights that emerging economies face renewed financial turbulence, that US economy registered robust GDP growth in the fourth quarter of 2013 and that the last quarter of 2013 revealed a heterogeneous economic performance in the developing world.
For more information:
http://www.un.org/en/development/desa/policy/wesp/wesp_mb.shtml
The quality of an online course / Calitatea unui curs onlineCosmin Herman
The quality of an online course / Calitatea unui curs online
The quality of online courses is a highly debated subject. There are several quality standards for e-learning proposed by national or international institutions involved in higher education, comprising multiple dimensions of e-learning.
Cosmin Herman, Anca Mustea
Comunitatea Moodle din Romania
www.moodle.ro
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McDonalds was started by Richard and Maurice McDonalds as a restaurant concept in San Bernardino , California on 15th May , 1940.
Mr. Ray kroc took over the rights from McDonald brothers and founded The McDonalds Corporation on 15th April , 1995 in Des Plaines , Illinois.
The Head Quarters of The McDonalds Corporation is at Oak brook , Illinois.
Is the tide rising?
The euro area is turning the corner from recession to recovery. Growth is projected to strengthen to 1 percent in 2014 and 1.4 percent in 2015.
Download full text
Based on our scuttlebutt and feedback from industry sources and ground views of experts regarding the current state of affairs in India due to Coronavirus lockdown, We shall now present our thoughts on investment strategy for post lock down period.
The current crisis is unprecedented in the sense that it has seriously impacted the liquidity, solvency and viability of a large number of businesses, all at the same time. The only way out of this crisis is to inflate a colossal bubble in asset prices, which is equally unprecedented. A global bubble will inflate in healthcare sector. far bigger and durable than the dotcom and subprime bubbles, as it deals with human lives directly. The politicians, bankers, investors, policy makers, administrators, businessmen, consumers et. al. who have spent weeks locked down in their houses fearing for their lives while watching the death statistics on media, would readily accept the need for much higher investment and spending on healthcare. In that sense, this bubble will be far more tangible, believable, acceptable and inflatable.
arifanee.com is world's leading website on the hottest financial news, perspectives and behind the scenes stories. arifanees.com brings you insight and information to inspire and transform your paradigm by enriching your with the best of facts and the vision.
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Five years after the onset of the global financial crisis the world economy remains in a state of disarray. Strong expansionary monetary policies in the major developed economies have not succeeded in fostering credit creation and strengthening aggregate demand. Fiscal austerity and wage compression in many developed countries are further darkening the outlook, not only for the short term, but also for the medium term. The burden of adjustment of the global imbalances that contributed to the outbreak of the financial crisis remains with the deficit countries, thus strengthening deflationary forces in the world economy. The dominance of finance over real economic activities persists, and may even have increased further. Yet financial reforms at the national level have been timid at best, advancing very slowly, if at all. In 2008 and 2009, policymakers of several economically powerful countries had called for urgent reforms of the international monetary and financial system. However, since then, the momentum in pushing for reform has all but disappeared from the international agenda. Consequently, the outlook for the world economy and for the global environment for development continues to be highly uncertain. Some developing and transition economies have been able to mitigate the impact of the financial and economic crises in the developed countries by means of expansionary macroeconomic policies. But with the effects of such a response petering out and the external economic environment showing few signs of improvement, these economies are struggling to regain their growth momentum. Prior to the Great Recession, exports from developing and transition economies grew rapidly owing to buoyant consumer demand in the developed countries, mainly the United States.
OVERVIEW Five years after the onset of the global financial crisis the world economy remains in a state of disarray. Strong expansionary monetary policies in the major developed economies have not succeeded in fostering credit creation and strengthening aggregate demand. Fiscal austerity and wage compression in many developed countries are further darkening the outlook, not only for the short term, but also for the medium term. The burden of adjustment of the global imbalances that contributed to the outbreak of the financial crisis remains with the deficit countries, thus strengthening deflationary forces in the world economy. The dominance of finance over real economic activities persists, and may even have increased further. Yet financial reforms at the national level have been timid at best, advancing very slowly, if at all. In 2008 and 2009, policymakers of several economically powerful countries had called for urgent reforms of the international monetary and financial system. However, since then, the momentum in pushing for reform has all but disappeared from the international agenda. Consequently, the outlook for the world economy and for the global environment for development continues to be highly uncertain. Some developing and transition economies have been able to mitigate the impact of the financial and economic crises in the developed countries by means of expansionary macroeconomic policies. But with the effects of such a response petering out and the external economic environment showing few signs of improvement, these economies are struggling to regain their growth momentum. Prior to the Great Recession, exports from developing and transition economies grew rapidly owing to buoyant consumer demand in the developed countries, mainly the United States.
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2. SECRET 2
Region / country 2012 2013 2014 2013 2014
Percentage
World 3.1 3.1 3.8 -0.2 -0.2
Advanced economies 1.2 1.2 2.1 -0.1 -0.2
US 2.2 1.7 2.7 -0.2 -0.2
Euro area -0.6 -0.6 0.9 -0.2 -0.1
UK 0.3 0.9 1.5 0.3 0.0
Japan 1.9 2.0 1.2 0.5 -0.3
Emerging markets
and
developing countries
4.9 5.0 5.4 -0.3 -0.3
Developing Asia 6.5 6.9 7.0 -0.3 -0.3
China 7.8 7.8 7.7 -0.3 -0.6
India 3.2 5.6 6.3 -0.2 -0.1
Sub-Saharan Africa 4.9 5.1 5.9 -0.4 -0.2
South Africa 2.5 2.0 2.9 -0.8 -0.4
Source: IMF WEO Update, July 2013
GDP projections Change from April
2013 WEO
Annual percentage change in GDP in selected regions/countries
• High levels of financial market volatility due to expectations of US
monetary policy tightening (“tapering”)
• Global growth close
to LR averages
– Some acceleration
expected in 2014
– Led by EU, UK
rebound
– China growth still
“low” in 2014
• IMF growth forecasts
revised lower
– Growth
disappointments in EMs
(especially China)
– Deeper than expected
EU recession
– Higher than expected
US fiscal drag
GLOBAL GROWTH OUTLOOK HAS CHANGED
3. • EU growth has begun to decline
– ECB continues to try support growth (extended forward guidance in July) – but consensus on
growth remains limited
– Fiscal drag, banking problems persist; lower growth in China could have negative feedback loop
for Germany; Italy’s appetite for fiscal reform may be waning
• Strong private growth in US dampened by fiscal
tightening
– 2014 and beyond growth looks reasonable
– But tempered with expectations of monetary policy tightening
• Japan growth has picked up
– Net exports risen thanks to yen depreciation
– Consumption other major driver of growth
• So 2014 June consumption tax could cause growth shock
• Chinese growth faltering
– Political leadership seeking more balanced growth, don’t want to encourage bubbles
– Investment sustainability, bank NPLs, local gov’t debt levels
• Emerging market growth has begun to slow
– Weak global trade, soft commodity prices
– BRICS have led slowdown
3
UNDERSTANDING GROWTH DYNAMICS:
THE THREE SPEED ECONOMY AS EMs DROP A GEAR
4. 4
Growth supported by:
- structural reforms
- solid growth in Asia and Africa
Downside risks
- weaker domestic demand
- infrastructure bottlenecks
- lower commodity prices
- increased external vulnerability –
capital outflows
In recession:
- sluggish domestic demand
especially in periphery countries
- fiscal consolidation
Downside risks
- slow implementation of the OMT
- weaker growth in France and
Germany
- high unemployment
Growth supported by:
- solid domestic demand
- supportive housing and labour
markets
Downside risks
- fiscal consolidation
-6
-4
-2
0
2
4
6
8
10
2000 2002 2004 2006 2008 2010 2012 2014
percent
Euro Area
Emerging market and developing economies
United States
THREE-SPEED GLOBAL RECOVERY:
EU IN RECESSION; REBOUND IN US & GROWTH IN EMs
5. • Stronger US growth = tighter US monetary policy
– Employment numbers have been improving
– May: Bernanke signals policy will need to tighten
• According to Fed guidance:
– QE programme likely to wind out by end 2014 (unemployment rate: 7.0%)
– Rates likely to rise in H2 2015 (unemployment rate: 6.5%)
• Market moves since May reflect re-pricing of global risks
– Market expects that by September 2013, Fed will begin to reduce its US$85bn per month bond
buying programme
– This will cause prices for bonds to fall (yields to rise)
– This makes EM bonds look relatively more expensive / unattractive
– Driven sell-off in EM markets (esp. bonds)
5CONFIDENTIAL
This is compounding EM problems: slower growth domestically, slower trade
globally, lower commodity prices
EM investors sold US$35.9bn of EM assets (bonds US$28.6bn)
Total net sales / purchases of US mutual and pension fund investors of EM assets. Source: EPFR
UNDERSTANDING GROWTH DYNAMICS: THE
DOUBLE-EDGED SWORD OF US MONETARY POLICY
6. • Varied drivers of EM slowdown:
– “growth disappointments in major emerging market economies, reflecting, to varying
degrees, infrastructure bottlenecks and other capacity constraints, slower external demand
growth, lower commodity prices, financial stability concerns, and, in some cases, weaker
policy support” IMF July WEO update
• Brazil
– Growth (already slowing as monetary policy normalised) hit by social unrest
– Currency volatility, weakness – makes more hikes likely
• India
– Global issues are now also beginning to impact - rupee very vulnerable; monetary policy
beginning to tighten in response
– Politics also continue to create policy paralysis, domestic investment falling
• Russia
– Demand for credit weakening, few reforms to help boost investment – even if monetary
policy loosens
• Turkey
– Political turmoil; high current account deficits; tighter monetary policy to protect currency 6
EMs IN THE SPOTLIGHT
7. • GDP growth has decelerated steadily
– from 7.9%YoY in Q42012 to 7.5%YoY in Q22013
– IMF forecasts 7.7% in 2013; 7.8% in 2014
• Many market commentators see growth below that
• New government continues to emphasise reforms
– Rebalancing from investment-led growth to consumption-based model.
– Use reforms rather than stimulus to sustain growth
• Credit market is chief concern
– China's debt: GDP ratio over 200%
• Higher than US / Europe
• 50% pts higher in just 4 years
– Shadow banking chief concern
– Lower credit growth could hit investment
• backbone of economic growth
7
Uncertainty will probably add to market
volatility
Although concerns are valid in long
term, not immediately apparent what
will trigger “meltdown”
Slower Chinese growth = lower
commodity prices, slower but not
collapsing African growth
THE UNRAVELLING OF CHINA?
8. • Africa
– The IMF expects Sub-Saharan Africa to grow by 5.6 per cent in 2013 and 6.1 per cent
in 2014
• Decline since April (-0.4%pts in 2013; -0.2%pts in 2014)
– Weaker commodity prices, weaker Chinese growth – also may be raising concerns
about sustainability of fiscal issuance in recent months
– Political risks in more fragile states could be affected by lower global risk appetite
• Long term growth story remains in tact
– Growing working population out of an estimated population of 1billion in 54 countries
– More stable macro-economic environment, growing intra-regional trade, large scale
investments from many BRIC economies
– Growth in extractive industries (mining, oil, gas) and opportunities in consumer
goods, and infrastructure/construction.
8
Summary for EMs:
Looking ahead China & US forces should offset “–” and “+” impacts on EM growth
However, financial market volatility will remain high
Capital flows competition to rise – many budget and current account deficits need to be funded
Domestic fundamentals may help to secure longer term flows
EMs IN THE SPOTLIGHT
9. 9
Global factors contributed to broad sell-off in emerging currencies since May
South Africa’s exchange rate movements have decoupled from general EM trends since mid 2012
… suggests the importance of local idiosyncratic factors (same for Brazilian real and Indian rupee)
Although a lot was priced into SA scenario – so hence relative resilience in July / August compared
to other EMs where bad news is resulting in some “catch up”
Rand versus EM currency index – 2011-2013EM currency changes vs US dollar, 2013
EMERGING MARKET VULNERABILITY SINCE MAY
EVIDENT IN CURRENCY MOVEMENTS
65
70
75
80
85
90
95
100
EM currency
index
10. • Growth outlook much weaker than during the Budget
– IMF forecasting growth of 2.0% in 2013 and 2.9% in 2014
• (0.8%pts and 0.4%pts lower than April)
• Despite the rebound in 2Q GDP, growth is likely to be subdued in H2:2013
– Rand weakness and volatility - Strike activity intensifying, uncertainty in the Middle-
East, fears of Fed tapering
– CPI inflation rose to 6.3% y/y in July on higher petrol prices, private transport operation
costs, electricity tariffs and municipal assessment rates
– Rising inflation, high debt levels and unemployment weigh on spending
• But major growth constraints remain:
– Power constraints remain a major blockage to growth
– Unemployment is stubbornly high at 25% and government continues to sustain
employment growth
– Investment very weak – just 2.5% in Q1 – SOEs grew by 1.5%
10CONFIDENTIAL
IN SA SPECIFICALLY
11. 0 2 4 6 8 10 12
ZAF
COL
RUS
MEX
CHL
IDN
BRZ
THA
TUR
IND
0 2 4 6 8 10
THA
BRZ
ZAF
MEX
RUS
CHL
IDN
COL
IND
TUR
0 2 4 6 8
BRZ
ZAF
TUR
RUS
MEX
IND
COL
CHL
IDN
THA
0 2 4 6 8
ZAF
BRZ
RUS
MEX
TUR
COL
CHL
IND
THA
IDN
0 2 4 6 8 10 12
MEX
TUR
THA
CHL
ZAF
BRZ
IDN
COL
RUS
IND
0 2 4 6 8
TUR
MEX
THA
CHL
COL
ZAF
BRZ
RUS
IDN
IND
-8 -6 -4 -2 0 2 4 6
RUS
MEX
TUR
THA
ZAF
CHL
BRZ
COL
IDN
IND
0 2 4 6 8 10 12
BRZ
THA
MEX
IDN
ZAF
CHL
COL
TUR
RUS
IND
11
2006 200920082007
2010 2011 2012 2013*
BRZ = Brazil, CHL = Chile, COL = Colombia, IND = India, IDN = Indonesia, MEX =
Mexico, RUS = Russia, ZAF = South Africa, THA = Thailand, TUR = Turkey
SOUTH AFRICA GDP GROWTH
FALLING BEHIND PEERS
12. 2006 200920082007
2010 2011 2012 2013*
12
-10 -5 0 5 10
ZAF
TUR
COL
MEX
IND
BRZ
IDN
CHL
RUS
THA
-10 -5 0 5 10
ZAF
TUR
CHL
COL
IND
MEX
BRZ
IDN
THA
RUS
-5 0 5 10
ZAF
TUR
COL
IND
BRZ
MEX
IDN
CHL
RUS
THA
-10 -5 0 5 10
TUR
ZAF
COL
IND
MEX
THA
BRZ
IDN
CHL
RUS
-10 -5 0 5 10
TUR
IND
COL
ZAF
BRZ
MEX
IDN
CHL
THA
RUS
-10 -5 0 5 10
TUR
IND
ZAF
COL
BRZ
CHL
MEX
IDN
THA
RUS
-10 -5 0 5
ZAF
TUR
IND
CHL
COL
IDN
BRZ
MEX
THA
RUS
-10 -5 0 5
TUR
ZAF
IND
CHL
COL
IDN
BRZ
MEX
THA
RUS
Rising external vulnerability • Structural weaknesses • Near term risks • Medium term risks • Government response
CURRENT ACCOUNT
BALANCE (% of GDP)
13. 13
GDP growth rebounded in the second quarter – but
underlying momentum remains weak
• Services sectors (excluding government) have been the chief contributor to growth (account
for more that 40 per cent of GDP)
• Mining, manufacturing and agriculture are the main swing factors to GDP
-8
-6
-4
-2
0
2
4
6
8
1Q2007 1Q2008 1Q2009 1Q2010 1Q2011 1Q2012 1Q2013
percentagepoints
Agriculture Mining Manufacturing
Government Services (non-gov) Other industry
•Recovery in manufacturing sector was responsible
for GDP acceleration in 1Q
•Primary sector was the main underperformer
during the quarter
15. • GDP growth: The South African economy has
expanded by 83 per cent over the past 19
years.
• National income per capita has increased from
R27 500 in 1993 to R38 500 in 2012 – an
increase of 40 per cent. Disposable income
per capita has increased by 43 per cent (just
over 1.9 per cent a year).
SA’S ACHIEVEMENTS SINCE 1994
16. • Gross fixed capital formation increased from
15% of GDP in 1993 to an average of 20% over
the past five years.
• While income inequality remains high, the
expansion of the social grants system has
contributed to a reduction in the proportion
of households living in poverty.
SA’S ACHIEVEMENTS SINCE 1994
17. • Substantial progress has been made in the
provision of basic services:
– Housing: RDP housing programme has built over 3
million housing units
– Social assistance: from 2.5 million to approximately 15
million recipients
– Water services: percentage of households with access
to potable water has increased from 60% to over 90%
– Access to electricity has increased from 50% of
households to 85%.
SA’S ACHIEVEMENTS SINCE 1994
18. • Over 1.6 million work opportunities were created
in phase 1 of the Expanded Public Works
Programme and the programme now aims to
achieve over 500 000 fulltime employment
opportunities.
• Stable public finances: from the fragmented
public administrations of the apartheid era we
have constructed a unitary state, nine provinces
and a reconfigured municipal landscape; debt as
a % of GDP has been reduced while doubling
expenditure on public services in real terms.
SA’S ACHIEVEMENTS SINCE 1994
19. • A new tax administration system has been
established in the SARS, and an overhaul and
modernisation of the tax structure has allowed
lower rates of company tax to be phased in
together with broadening of the tax base.
• South Africa’s financial sector remains robust and
healthy, with strong growth in turnover on the
JSE stock exchange, highly liquid capital markets
and a well regulated banking and financial
services industries.
SA’S ACHIEVEMENTS SINCE 1994
20. • Transformation of ownership and management is
under way through an orderly process governed by law
and agreements between stakeholders.
• Over R600 billion in BEE transactions have been
recorded since 1995;
• black people and women in senior management has
increased from less than 10% in the 1990s to over 40%
today – more progress is needed, but the trend is in
the right direction.
• Dynamic growth in telecommunications has
transformed the way people communicate with each
other, and there is steady progress in internet access.
SA’S ACHIEVEMENTS SINCE 1994
21. • In hosting the 2010 FIFA World Cup we have demonstrated
our capacity to manage major events and undertake large
construction projects in record time;
• other major infrastructure projects include our partnership
with Lesotho in building the Lesotho Highlands Water
Project,
• completion of the Gautrain rapid rail project,
• expansion and rehabilitation of our main airports, major
national road improvements and the expansion of power
generation capacity and rail transport capacity that is now
in progress.
• The total value of infrastructure projects currently under
way and in planning amounts to over R3.6 trillion.
SA’S ACHIEVEMENTS SINCE 1994
22. • We have initiated one of the largest renewable
energy programmes in the world, bringing private
sector capacity and new technologies into
improving long term energy security and
contributing to environmental sustainability.
• While the corporate conglomerates of the old
South Africa have largely been dismantled, new
and dynamic South African companies are
making their mark on the global and regional
front
SA’S ACHIEVEMENTS SINCE 1994
23. • SA mining and construction companies are
contributing to Africa’s development
• Telecommunications companies are major players
in many other countries, our retail and logistics
companies are growing in significance in Africa’s
trade and development.
• SA is playing its part in reconfiguring global
economic arrangements, through participation in
the IMF and World Bank, the G20, the Financial
Stability Forum, the WTO and more recently in
partnership with the BRICS countries.
SA’S ACHIEVEMENTS SINCE 1994
25. • REIGNITING ECONOMIC GROWTH
• Cabinet recognised that the South African
economy can no longer rely heavily on the global
economy to reignite growth and create jobs. The
focus of government, business and labour must be
on accelerated implementation of domestic plans
to grow the economy in an inclusive way and
create jobs, as well as seizing opportunities in the
region.
• In this regard, Cabinet decided, among other
things, to:
CABINET LEKGOTLA DECISIONS
26. • 2.1 Act immediately and take steps to resolve the energy
constraint by:
• Starting the process towards building Coal 3 while working with
relevant stakeholders to speed up co-generation;
• Finalising the process of authorising shale gas exploration in a
responsible and environmentally friendly manner;
• Taking steps to encourage projects to enhance regional hydro-
power capacity and enter into carefully considered contracts to
import energy from the region.
• Improve the regulatory environment through, for
example, streamlining licence approvals for water, mining and
environmental impact assessments with the view of shortening the
approval times.
• Strengthen industrial programmes, including mineral beneficiation
projects in the platinum, titanium, iron and steel sectors.
ACT IMMEDIATELY
27. • Accelerate various infrastructure programmes: National Treasury
and relevant departments will work with the Presidential
Infrastructure Coordinating Commission to unblock procurement
processes in infrastructure projects. This will cover priorities in
education, health, transport, public works and human settlements.
• Stimulate agriculture and agro-processing for the benefit of rural
development and job creation by finalising the Agricultural Policy
Action Plan in partnership with the sector by the end of next
month, September 2013.
• Upscale youth and public employment schemes through a new
phase of the Extended Public Works Programme and expansion of
the Community Work Programme. This will include implementation
of youth employment incentives and the employment tax incentive
for Special Economic Zones.
ACT IMMEDIATELY
28. • Stabilise the mining sector by supporting the Framework Agreement for a
Sustainable Mining Industry as led by the Deputy President. Government
will continue implementing its key commitments under the Framework to
help stabilise the industry.
• Improve support to small businesses by, among other things, creating a
one-stop shop and portal for SMME’s. This will start with the alignment of
SMME programmes across all government spheres and departments and
will be launched by the end of this year.
• Ministers leading Outcome 4 – Decent Employment Through Inclusive
Growth will prepare an action plan to give effect to the aforementioned
proposals by September this year. These implementation plans will see
government acting on key elements of the National Development Plan as
part of speeding up implementation of Vision 2030.
ACT IMMEDIATELY
29. • Symbiotic relationship between government
and business, specifically focusing on
– NDP,
– Infrastructure and
– Job creation
WE HAVE MADE A DIFFERENCE…!
30. • SYMBIOTIC
• INTERDEPENDENT
• SYNERGISTIC
• CONTRADICTIONS / CONSTRUCTIVE TENSION
• GOVERNMENT AS AN ENABLER, SUPPORTER, OF BUSINESS
• REPRESENTS NATIONAL INTEREST, BALANCED ACTION
• GOVERNMENT AS “REGULATOR” - EXCESSES
• THE EXCLUDED……
• How the public and private sectors can work more closely
together?
GOVERNMENT and BUSINESS?
31. • South Africans focus too intensely on what is
bad, Archbishop Emeritus Desmond Tutu said last Wednesday.
• "Yes, the state of our political firmament, and the
lawlessness, cannot be ignored," he said in a speech at Lead SA's
third anniversary.
• "But my heart soared on Saturday where we witnessed ecstatic
Bafana Bafana supporters giving the Springboks such a rousing
welcome. And the Springboks bore the word, 'unite' on their
sleeves."
• Anyone who imagined this scene in the 1980s would have been
accused of hallucinating, if not terrorism, and would have been
taken to an asylum or prison, Tutu said.
ARCHBISHOP EMERITUS TUTU
32. "Strong societies have strong civil societies,
with citizens who are active and engaged,
who, through their active engagement,
have earned the right to hold their
leadership to account."
ARCHBISHOP EMERITUS TUTU
Editor's Notes
Slowing growth in many parts of the worldJP Morgan global PMI indicates weak industrial production globallyEurozone growth now expected to be weakerIMF has downgraded German and French growth since April WEO (Germany 0.3% from 0.6%; France -0.3% from -0.2%)Emerging market outperformance and resilience is weakening, growth downgrades accompanied by worsening current accounts and rising debt ratiosIMF downgrades China growth to 7¾ per cent in 2013 (from 8% in April) India growth slowed to 4.8 per cent y/y in first quarterBrazil growth sluggish in 2012 and early 2013Protests in Turkey and Brazil (both have grown faster than SA in recent years)US monetary policy and emerging market sell offProspects of US tapering QE3 in 2013/2014 has spooked marketsConcerns have triggered rising US bond yields and reversal in investor sentiment towards emerging market equities, bonds and commodities
EU: sentimentreadings as well as some hard data (IP, retail sales) have recovered a bit during thesecond quarter, despite expectations remaining well below historical averages. On banking union, it is also clear that there are ongoingfundamental disagreements about the degree of centralisation of the resolutionauthority and the resolution fund, illustrating the difficulties of coordination. European officials are focusing theirgrowth strategy on two main angles: first, by introducing measures against youthunemployment, and second by excluding non-recurring and growth-supportivepublic investment programmes from deficit calculations.At the July meeting,President Draghi announced a new ‘forward guidance’ framework, allowing “the keyinterest rates to remain at present or lower levels for an extended period of time”. But ECB Coeuré’s remarks thatforward guidance “would need to be reassessed each month” highlighted the limitedvalue of the guidance, beyond the introduction of a clear bias on the policy stance.PM Abe’s final decisionregarding the consumption tax hike after the upcoming Upper House Election (likelyin September or October) The BoJ’s JuneTankan revealed a broad-based improvement in business confidence and significantupward revisions to business investment plansIn China, growth will average 7¾ percent in 2013-14, ¼ and ½ percentage points lower in 2013 and 2014, respectively, than the April 2013 forecast. Forecasts for the remaining BRICS have been revised down as well, by ¼ to ¾ percentage points.
Fed officials continue to emphasize that a near-term start to scaling back QE stillwould leave policy on a highly accommodative path where no rate hikes areplanned for a long time. TheThe outlook for inflation remains softer than policymakers’ medium-term goal of 2%.Slower growth abroad has reduced pressures on domestic goods prices and labourcosts remain subdued.
India, as a global capital 'absorber', is vulnerable. It has a CAD of 4%+ of GDP,external debt is rising and its markets have gained on equity and debt inflows. Therupee has taken a hit, breaching Rs60/USD levels.
In China, the ratio of private debt/GDP now exceeds thelevels in the US and euro area and has risen by more than 50 percentage points in justfour years. In this context, China’s authorities seem to believe that a modest furthereconomic slowdown would be less destabilising than a major new credit stimulusaimed at restoring real GDP growth to 8%-plus.The economy has been decelerating steadily. The growth rebound in late 2012proved short-lived. Growth moderated from 7.9% YoY in 4Q/12 to 7.7% in 1Q/13,and to 7.5% in 2Q. Industrial production growth slowed from 9.5%YoY in 1Q/13 to9.1% in 2Q. Year-to-date (YTD) FAI growth slowed consistently from 21.2%YoY atthe beginning of the year to 20.1% in June. Retail sales have been improving sinceJanuary, but 1H growth (12.7% YoY) paled relative to the annual expansion of14.3% in 2012. The weak trade data in June point to weak external and domesticdemand. Meanwhile, the gradual softening of the economy has not yet led to largescaleunemployment and job creation appears healthy, which allows thegovernment to withhold stimulus and focus on restructuring the economy.
India, as a global capital 'absorber', is vulnerable. It has a CAD of 4%+ of GDP,external debt is rising and its markets have gained on equity and debt inflows. Therupee has taken a hit, breaching Rs60/USD levels.
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Although GDP growth rebounded in the second quarter, underpinned by a strong recovery in manufacturing output, the higher print is largely a bounce back from a weak first quarter rather than a signal of strengthening growth momentum. For upcoming quarters, the labour strife in the mining and manufacturing sectors poses the biggest threat to growth.