SA economic review Kevin Lings. August 2018

Transcription

1 SA economic review Kevin Lings August 2018

2 South Africa real GDP growth year-on-year %y/y Ave 4.3% 4 Ave 2.5% 3 2 Ave 0.9%

3 Growth in fixed investment spending by SOEs % year-on-year, 4-quarter moving ave

4 SA rate of growth in household residential mortgages % year-on-year Average inflation since

5 South Africa vs emerging market manufacturing Index Emerging market industrial production at a record high Emerging market industrial production SA manufacturing

6 South Africa business confidence (BER) Index Business confidence has been depressed for 10 years

7 5 IMMEDIATE ECONOMIC CHALLENGES FACING THE COUNTRY 1 Lift business confidence 2 Restore fiscal discipline 3 Reform SOEs Clarify transformation policies 4 5 Dramatically reduce corruption

8 41% SOUTH AFRICA S ECONOMIC TURNAROUND SCORE Below 30%: stagnation, risk of recession, weak confidence 30% to 50%: positive but sluggish growth, constrained budgets 50% to 70%: growth around 2% to 3%, improving fiscal position Above 70%: strong growth, vibrant labour market As at mid-august 2018

9 2 MAJOR STRUCTURAL CHALLENGES FACING THE COUNTRY 1 Poor education outcome 2 High unemployment rates

10 South Africa school enrolment HUGE DROPOUT OF STUDENTS 1.24 million 1.11 million 687 K GRADE 1 GRADE 10 GRADE 12 10

11 SA university graduation rates %, Percent graduation rate Rhodes University University of JHB University of CT Stellenbosch University University of the Witwatersrand University of the Free State University of Pretoria University of KwaZulu-Natal 17% of students obtain their degree 10 UNISA

12 South Africa youth unemployment rate Q Q % 53.7% 67.1% Excluding discouraged workers Including discouraged workers

13 SA private sector could grow strongly if confidence improved

14 South Africa corporate deposits R billion

15 Emerging market corporate debt as % of GDP % of GDP, end 2017 China Korea Chile Israel Turkey Malaysia Hungary Czech Rep Russian Federation Thailand Saudi Arabia Poland India Brazil South Africa Colombia Mexico Indonesia Argentina

16 SA households debt as % of GDP % Long-term average

17 Emerging market household debt as % of GDP % of GDP, end SA household debt relatively modest Korea Thailand Malaysia China Chile Israel Poland South Africa Czech Rep. Colombia Brazil Hungary Turkey Indonesia Mexico Russian Federation Saudi Arabia India Kenya Argentina Egypt Ghana Ukraine Nigeria Pakistan 17

18 SA household debt servicing as % of disposable income %

19 Positive developments in the political economy SAA / ESKOM NATIONAL BUDGET MOODY S FOREIGN INVESTMENT INVESTMENT/ JOB SUMMIT

20 South Africa Poised for growth

21 SA link between employment and consumer spending Number of formal sector job gains at the ave monthly salary % % % % % % % % Growth in consumer spending 21

22 SA is heavily impacted by global developments

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24 Breakdown of the world economy estimated in 2017 Canada 2.1% Germany 4.6% Euro-area 15.8% UK 3.3% Russia 1.9% China 15% Japan USA 24.3% 3.3% 6.1% Sub- Saharan Africa 1.9% India South America 7.4% Brazil 2.6% South Africa 0,4% Australia 1.7% 24

25 SA imports and exports as % of GDP % of total SA is regarded as a very open economy

26 South Africa net foreign capital flows R billion (cumulative since 1984)

27 SA rand/dollar week volatility Weekly change in the rand/dollar exchange rate, %

28 GDP growth: South Africa vs World IMF, Stanlib %y/y World growth South Africa growth

29 Consensus 2018 GDP forecast for US and euro area % year-on-year 3,0 2,8 2,6 US GDP forecast ,4 2,2 Euro area GDP forecast ,0 1,8 1,6 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 29

30 Thank You

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