Retail indaba august 2013
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Transcript of Retail indaba august 2013
South Africa Economic Overview & Prospects
2013 and beyond
August 2013
The key ingredients
• Rising fixed investment activity• Increased employment
A growing economy:
• Rising disposable income• Rising household wealth• Growing confidence• Increased willingness to lend and borrow• Increased willingness to spend
Rising employment
212 April 2023
312 April 2023
SA economy is growing, but also increasing running out of fuel
The economy is struggling to gain momentum because some key sectors are not performing
412 April 2023
Manufacturing has fared
better but not great
This sector is holding
the whole economy
back
Mining is in the
doldrums
So what is troubling producers:
• Recession in the Eurozone• Growth in China is moderating
A sluggish & patchy world economy:
• Run away electricity costs (2007-2012: +230%)• Rising unit labour costs (above-inflation wage growth, fading
productivity, more & violent strikes)• Insufficient power, transport, logistics infrastructure• Poor service delivery, red tape, corruption
Surging production costs
512 April 2023
So the private sector has been reluctant to expand capacity
612 April 2023
And they have been equally hesitant to expand their labour force
712 April 2023
Most private industries have not created any new jobs since 2008
812 April 2023
Government consumption expenditure is still driving growth, but is not sustainable
912 April 2023
Because government ran out of funds some four years ago
1012 April 2023
And the world has taken note
■ Ratings downgrades
■ Moody’s A3 to Baa on 27 September with negative outlook
■Lack of institutional strength
■Shrinking fiscal space
■Negative investment climate due to infrastructure shortfalls, high labour costs despite high unemployment and increased concerns over future political stability
■ S&P BBB from BBB+ on 12 October, negative outlook
■More emphasis on social tensions spilling over into worse forecasts
1212 April 2023
Growth in the total wage bill will be contained
1312 April 2023
So growth in disposable income is slowing
1412 April 2023
And households are still too indebted & vulnerable
General government is at least accelerating spending on social infrastructure
1512 April 2023
1612 April 2023
The SARB’s problem is that growth is modest, but becoming increasingly unsustainable
Source: SARB QB June 2012
The good news is that we are still getting the capital inflows we need, but much depends on government
1712 April 2023
…which undermines the rand and fuels inflation
1812 April 2023
But overall the subdued growth rate will probably set the tone for some time to come, keeping interest rates flat
1912 April 2023
Forecasts
2008 2009 2010 2011 2012 2013 2014 2015Economic growth - Annual growth rates (%)Consumer spending 2.2 -1.6 4.4 4.8 3.5 2.7 3.2 3.5Fixed investment 13.0 -4.3 -2.0 4.5 5.7 4.9 5.2 6.2Exports 1.8 -19.5 4.5 5.9 0.1 2.7 4.2 4.5Imports 1.5 -17.4 9.6 9.7 6.3 7.8 6.8 7.0GDP 3.6 -1.5 3.1 3.5 2.5 2.0 3.1 3.4Balance of PaymentsCurrent Account (R'bn) -161.9 -97.1 -75.0 -98.8 -197.6 -234.1 -236.1 -237.7As % of gdp -7.2 -4.0 -2.8 -3.4 -6.3 -6.9 -6.3 -5.8Interest rates - Year-end rates3-month JIBAR 11.5 7.3 5.7 5.7 5.1 5.2 6.3 7.7Prime 15.0 10.5 9.0 9.0 8.5 8.5 9.5 11.0Long bond 7.3 9.1 8.1 8.1 6.8 7.7 8.3 7.2Exchange rates - Annual averagesRand/US$ 8.26 8.44 7.33 7.30 8.21 9.75 10.14 10.38Rand/Euro 12.10 11.75 9.76 10.20 10.62 12.68 13.19 13.69Yen/Rand 12.51 11.08 11.97 10.91 9.75 10.05 10.10 10.07Inflation - Annual averagesNew CPI 11.3 7.1 4.3 5.0 5.7 5.9 5.8 5.9
The end, thank you, and good luck
2112 April 2023
2212 April 2023
And the plans for next three years remain ambitious
2312 April 2023
Weak exports are still a major constraints on both confidence and performance on the production side
Source: SARB QB June 2012
2412 April 2023
On balance, 2013 is expected to be very similar to 2012
Source: IMF WEO July 2013
Countries and regionsForecasts ForecastsJuly 2013 April 2013
2008 2009 2010 2011 2012 2013 2014 2013 2014 2015 2016
World 2.8 -0.6 5.2 3.9 3.1 3.1 3.8 3.3 4.0 4.4 4.5Advanced economies 0.1 -3.5 3.0 1.7 1.2 1.2 2.1 1.2 2.2 2.6 2.6 US -0.3 -3.1 2.4 1.8 2.2 1.7 2.7 1.9 3.0 3.6 3.4 Japan -1.0 -5.5 4.7 -0.6 1.9 2.0 1.2 1.6 1.4 1.1 1.2Euro area 0.4 -4.4 2.0 1.5 -0.6 -0.6 0.9 -0.3 1.1 1.4 1.6 Germany 0.8 -5.1 4.0 3.1 0.9 0.3 1.3 0.6 1.5 1.3 1.3 UK -1.0 -4.0 1.8 1.0 0.3 0.9 1.5 0.7 1.5 1.8 1.9Emerging and developing 6.1 2.7 7.6 6.2 4.9 5.0 5.4 5.3 5.7 6.0 6.1Developing Asia 7.9 6.9 10.0 7.8 6.5 6.9 7.0 7.1 7.3 7.6 7.7 China 9.6 9.2 10.4 9.3 7.8 7.8 7.7 8.0 8.2 8.5 8.5 India 6.2 5.0 11.2 6.3 3.2 5.6 6.3 5.7 6.2 6.6 6.9Middle East and N Africa 5.2 3.0 5.5 3.9 4.4 3.1 3.7 3.1 3.7 4.5 4.6Sub-Saharan Africa 5.6 2.7 5.4 5.4 4.9 5.1 5.9 5.6 6.1 5.9 5.7 South Africa 3.6 -1.5 3.1 3.5 2.5 2.0 2.9 2.8 3.3 3.4 3.3 Angola 13.8 2.4 3.4 3.9 8.4 7.0 6.7 6.2 7.3 7.0 6.7 Nigeria 6.0 7.0 8.0 7.4 6.3 7.0 7.0 7.2 7.0 7.0 7.0 Zimbabwe -17.8 8.9 9.6 10.6 4.4 5.5 5.5 5.0 5.7 5.5 5.5 Namibia 3.4 -1.1 6.6 4.8 4.0 4.3 4.3 4.2 4.0 4.3 4.3Latin America 4.2 -1.5 6.1 4.6 3.0 3.0 3.4 3.4 3.9 3.9 3.9 Brazil 5.2 -0.3 7.5 2.7 0.9 2.5 3.2 3.0 4.0 4.1 4.2 Mexico 1.2 -6.0 5.3 3.9 3.9 2.9 3.2 3.4 3.4 3.3 3.3Central & Eastern Europe 3.1 -3.6 4.6 5.4 1.4 2.2 2.8 2.2 2.8 3.3 3.6 Russia 5.2 -7.8 4.5 4.3 3.4 2.5 3.3 3.4 3.8 3.7 3.6
2512 April 2023
Hugely unsustainable public sector debt will continue to constrain economic growth in the Eurozone and most advanced economies
Source: IMF WEO Oct 2012
2612 April 2023
SA highly exposed to the weakest spot in the world economy – the Eurozone
Agriculture: 37%Manufacturing: 24.7%Mining: 19.5%
And central banks are doing their best to push liquidity – especially in Japan where “Abenomics” has taken hold
2812 April 2023
Softer growth forecasts have hurt international commodity prices
Source: INET
The gold price has been under huge pressure
2912 April 2023
Global food prices are easing
3012 April 2023
But global oil prices have remained sticky on account of the troubles in Egypt and Syria
3112 April 2023
3212 April 2023
Growth in domestic spending is increasingly artificial
Source: SARB QB June 2012
Difficult conditions for producers have implications for capital expenditure
3312 April 2023
3412 April 2023
In advanced economies, conditions remain weak and mixed
3512 April 2023
But it is really the sharper than expected slowdown in emerging markets that are behind the downward revisions