Snapshot of SA Economy

Transcription

1 Snapshot of SA Economy Kgotso Radira 1 September 29

2 Economic Outlook

3 Global share indices 2 Indices S&P 5 FTSE 1 DAX Nikkei 3

4 Global interest rates 7 % UK US 4

5 Consumer Confidence US Euro UK

6 Leading business cycle indicators for SA and its major trading partners 12 Index US Euro UK Japan SA

7 Global PMI, signalling an improvement in production 7 Index Global PM I Services

8 the global economy continues to show signs of stabilisation.. 2 % qqsaa SA GDP US GDP Eurozone UK 8

9 Jan- 8 Mar- 8 May- 8 Jul- 8 Sep- 8 Nov- 8 Jan- 9 Apr- 9 Jun- 9 Aug Jan- 8 Mar- 8 Jun- 8 Aug- 8 Nov- 8 Feb- 9 Apr- 9 Jul Jan- 8 Mar- 8 Jun- 8 Aug- 8 Nov- 8 Feb- 9 Apr- 9 Jul- 9 Oct- 9 Brent Crude oil Platinum Commodity prices are rising.. Gold

10 .. basket of commodities % y/y Economist Commodity Prices

11 11 Exchange rates

12 The rand continues to strengthen.. 12 Dollar 15 Euro Jan- 8 Mar- 8 Jun- 8 Aug- 8 Nov- 8 Feb- 9 Apr- 9 Jul- 9 Oct- 9 1 Jan-8 Mar-8 Jun-8 Aug-8 Nov-8 Feb-9 Apr-9 Jul-9 2 Pound Jan- 8 Mar- 8 May- 8 Jul- 8 Sep- 8 Nov- 8 Jan- 9 Apr- 9 Jun- 9 Aug- 9

13 the trade-weighted rand is relatively unchanged... % change Euro 35.7% USD 15.15% GBP 14.91% JPY 1.26% y/y 13

14 1 Jan =1 similar to other commodity trading economies.. 17 Index Jan-8 Mar-8 Jun-8 Aug-8 Nov-8 Feb-9 Apr-9 Jul-9 Oct-9 USDNZD USDCAD USDAUD USD ZAR 14

15 1 Jan =1 also an emerging market story.. Index Jan-8 Mar-8 Jun-8 Aug-8 Nov-8 Feb-9 Apr-9 Jul Brazil Turkey SA

16 the dollar has also been under pressure Jan-9 Mar-9 May-9 Jul-9 Sep-9 EURUSD 16

17 $bn..mainly due to an outflow of funds from the US Foreign net purchases of US securities

18 these funds have flowed to emerging markets, including SA equities.. 15,, Rm's 1,, 5,, -5,, -1,, -15,, -2,, -25,, 18-3,, Foreign purchases of SA equities

19 .and into SA bonds. 2 R'ms Foreign purchases of SA gilts 19

20 the rand is expected to remain at appreciated levels, supported by signs of stabilisation of the global economy (rising commodity prices) Q1.9 Q2.9 Q3.9 Q4.9 Q1.1 Q2.1 Q3.1 Q R/$ R/GBP R/Euro Yen/R $/GBP $/Euro Yen/$

21 21 Inflation

22 food price inflation at the retail level has begun moderating lagging the trend in PPI food 4 % y/y Jan- May-1 Sep-2 Jan-4 May-5 Sep-6 Jan-8 May-9 22 CPI Food Inflation PPI Agricultural Food

23 ...retail food price inflation should moderate further due to the rand s strength.. % y/y Jan- Jan-3 Jan-6 Jan-9 CPI Food Inflation USDZAR

24 deflation likely this year at the producer level, and approaching the lower limit of the inflation target range for retailers by early % y/y Target range (3-6%) Jan-8 Jan-9 Jan- Jan-1 CPI PPI

25 ..risks to the outlook are tilted more to the downside but oil prices remain a risk $ Brent Crude Oil 25

26 Inflation and interest rate forecasts Q1.9 Q2.9 Q3.9 Q4.9 Q1.1 Q2.1 Q3.1 Q CPI inflation PPI inflation Prime

27 27 Economic Growth

28 we expect a 1.2% qqsaa contraction in Q3.9 (Q2.9 recorded -3.%, Q %) 15 % SA GDP qqsaa Leading Indicator qqa 28

29 all major sectors contracted in Q2.9 % qqsaa Manufacturing Mar-95 Mar-97 Mar-99 Mar-1 Mar-3 Mar-5 Mar-7 Mar-9 % qqsaa Retail & Wholesale Trade Mar-95 Mar-97 Mar-99 Mar-1 Mar-3 Mar-5 Mar-7 Mar-9 29 Finance, real estate & business services % qqsaa Mar-95 Mar-97 Mar-99 Mar-1 Mar-3 Mar-5 Mar-7 Mar-9

30 manufacturing sector affected by weak external demand for SA exports % y/y Asia % y/y Europe Jan- Jan-2 Jan-4 Jan-6 Jan Jan- Jan-2 Jan-4 Jan-6 Jan-8 % y/y 1 Africa Jan- Jan-2 Jan-4 Jan-6 Jan-8

31 ...retail, wholesale and finance sectors affected by slowdown in credit demand and low consumer confidence.. % y/y 3 Total Credit Demand % y/y 3 Consumer Credit Demand Jan- Jan-2 Jan-4 Jan-6 Jan-8 Jan- Jan-2 Jan-4 Jan-6 Jan-8 % y/y Consumer Confidence Jun- Jun-2 Jun-4 Jun-6 Jun-8

32 thousands as a result 475 jobs have been lost so far this year and more to follow Agriculture Mining Manufacturing Utilities Construction Trade Transport Finance Comm/social serv Private h/hlds Year to Date 32

33 domestic consumption? % qqsaa Consumption by households Spending on Durable goods Mar- Mar-2 Mar-4 Mar-6 Mar-8 Spending on semi-durable Mar- Mar-2 Mar-4 Mar-6 Mar Mar- Mar-2 Mar-4 Mar-6 Mar-8 Spending on non-durable Mar- Mar-2 Mar-4 Mar-6 Mar-8

34 .debt levels still high, while disposable income is falling % Household debt % of disposable income % Disposable income Mar- Mar-2 Mar-4 Mar-6 Mar Mar- Mar-2 Mar-4 Mar-6 Mar % Savings % of Disposable income Mar- Mar-2 Mar-4 Mar-6 Mar-8

35 35.so where to from here?

36 .for SA to grow we must invest in fixed assets.. % South Af rica India Ireland Indonesia Thailand Chile China 36

37 .SA is moving in the right direction, although slowly.. % Gross Fixed capital formation % of GDP 37

38 SA s leading indicator has risen for three successive months, could be signaling a turning point. Index Business Cycle Phases (blue downward phase) Leading Indicator 38

39 Similarly, the US recorded a less than expected contraction in Q2.9 and is likely to record GDP growth in Q3.9 (SA lags the US by one quarter)... % qqsaa SA GDP US GDP

40 we believe the worst of the current recession is over but remain cautiously optimistic about the recovery path % SA GDP qqsaa Leading Indicator qqa 4

41 despite seeds of hope for SA: the PMI is indicating a less rapid contraction in the manufacturing sector in 6 months time Index % year/year PMI - Exected Business Confidence Manufacturing 41

42 PMI new sales orders & inventories Ratio Indices New sales orders to inventories ratio New sales orders Invento ries 2

43 SA s key forecasts to Q1.1 Household Consumption Expenditure Q3.9 Q4.9 Q1.1 GDP (qqsaa, %) HCE (qqsaa, %) GCE (qqsaa, %) GFCF (qqsaa, %) Real change in Inventories (R bn) GFCF as a % GDP GDE (qqsaa, %) Exports (goods & non-factor services) - (qqsaa, %) Imports (goods & non-factor services) - (qqsaa, %) Balance: Current Account (saa) - R bn Balance: Current Account (saa) - % GDP

44 Factors supporting another interest rate cut this year Latest Previous Supportive Unemployment Yes 44 TEI - leading indicator for retail sales Below 5 Below 5 & falling Yes PMI Below 5 Below 5 & falling Yes PMI Inventories Below 5 Below 5 & falling Yes PMI New Sales Orders Below 5 Below 5 & falling Yes RMB/BER Business Confidence Index Below 5 & falling Below 5 & falling Yes FNB/BER Composite Building Confidence Index Below 5 & falling Below 5 & falling Yes PSCE Yes PPI Inflation Yes Growth Yes CPI Inflation Expected to be in target in Q4.9 CPI Inflation - December 5.5 Yes

45 45 Fiscal Policy

46 Personal Income tax Personal income tax Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Year Percentage / Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar /1

47 Company Tax Company tax Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Year Percentage t Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

48 Value Added Tax VAT Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Year Percentage Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 48

49 Total Tax Revenue Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Year Percentage Total Revenue Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

50 Total Expenditure Total Expenditure Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Year Percentage Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 5

51 51 Budget Deficit

52 Summary Global economy approaching stability although not uniform Most of this due to government intervention and inventories SA s recovery will lag trading partner countries and is expected to be slow PPI and CPI are expected to continue on their down path Interest Rates The rand is still seen remain at current levels but could reverse Budget deficit likely to be around 8% of GDP 52