Budget 2012: The Minister tries really hard to get infrastructure going Minister hits richer savers with tax increase.
Agenda. Background to the Budget 2012. World South Africa. The Budget in a nutshell.
The developed World business confidence.
International Leading indicators.
Some IMF growth forecasts www.economists.co.za 5
Real Interest rates and Commodity prices. www.economists.co.za 6
Monetary Policy in Developed country is going to remain loose for some time Very low interest rates keep the world going at present. They are unlikely to raise any time soon perhaps not even in 2014. www.economists.co.za 7
USA debt to GDP.
Euro Area outstanding debt securities.
What would my presentation be without the oil price.
South African Economy. Slower growth and higher inflation. It s true we have a R3,3 Trillion Rand economy.
GDP detail and History. Agriculture, forestry and fishing 2009 2010 2011 2012 2013 2014 2015 Mining and quarrying Manufacturing Electricity, gas and water -3.0% 0.9% 3.2% 3.3% 4.1% 1.9% 2.1% -4.2% 5.8% -0.3% -0.4% 1.0% 3.5% 3.0% -10.4% 5.0% 2.4% 1.1% 2.0% 4.3% 4.1% -1.6% 2.0% 1.2% 0.6% 2.3% 2.5% 2.7% Construction 7.4% 1.5% -1.2% 1.1% 1.8% 2.8% 2.3% Wholesale-, retail-, & accomodation -2.5% 2.2% 3.0% 2.1% 2.7% 4.0% 4.4% Transport, storage and communication 0.6% 2.9% 4.2% 3.8% 4.6% 5.1% 5.7% Finance, real estate and business services 0.9% 1.9% 3.5% 2.2% 3.1% 3.7% 3.1% General government services 4.1% 3.0% 3.4% 3.7% 3.6% 3.4% 3.5% Personal services -0.3% 0.6% 3.7% 2.4% 2.0% 2.6% 3.1% Total value added at basic prices GDP at market prices -1.5% 2.8% 3.1% 2.3% 2.8% 3.6% 3.6% -1.7% 2.8% 2.9% 2.4% 2.8% 3.6% 3.6% 12 www.economists.co.za
SA Manufacturing. Bottoming again? www.economists.co.za 13
Mining as % of GDP. www.economists.co.za 14
Retail sales and rates. www.economists.co.za 15
Monetary conditions are rather loose too.
Forecasts. Inflation to rise to 6.2% according to Treasury in 2012. We think 6,2% is realistic. GDP Growth to slow to 2,7% according to government. Low Interest rates to stay for the whole year. Fighting a battle against the slowdown / recession likely to win but at a higher debt cost.
Real Prime rate www.economists.co.za 18
Trade partners weighted PPI and SA PPI. 19 www.economists.co.za
Total Domestic Credit and Inverse Rates www.economists.co.za 20
What did happen in the last four years. Debt to GDP generally higher than economic growth. Deficit rose from about 23% to about 37,8% of GDP or 15 percentage points to GDP. Debt guarantees rose as did salaries. Loose Fiscal policy to counter act recession. Still no reduction in business rules outside of SARS, Treasury which are easier to handle anyway. Special Economic Zones will help in future.
One part that continues to grow although we are promised that it will grow slower. Millions of Rand 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 Compensation of employees
Another thing rising quickly government guarantees
Government debt on the way up..
South African Spending.
General Government remains behind with infrastructure spend.
Words and facts. Government words say infrastructure spend every year but the fact speak differently but we will give benefit of the doubt here. Government speaks out against higher compensation of employees in government but again the fact so far have said otherwise. In the last 10 budget we were promised lower government compensation, but on average the compensation came in 15,7% higher than when first announced.
What I really like.. Saving products announcement. Help for the middle class. Lower than inflation increases in welfare payments. Simplified tax for micro businesses. Bring the deficit down slightly over the last year and a seemingly big commitment to keep debt to GDP below 40% for the next three years.
What I would have liked to have seen. More Simplification for small and medium business. A real case of someone being named and shamed for not doing their job. A greater commitment to keeping taxes lower and help in keeping spending on salaries in check as the new growth path suggested business do. A bigger thank you the world s smallest tax base in a relative sense.
Thank you t 011 781 9980 f 011 781 9987 e info@ 1st Floor, Block D, Palms Office Park, 391 Main Avenue, Randburg