SA’s ECONOMIC AND SOCIAL INDICATORS  Economic Indicators -Used to establish the performance of the economy in terms of macro economic objectives of the Govt = economic growth = price stability = exchange rate stability = employment stability  Growth - The growth of the economy is measured in terms of production capacity and is measured by the GDP  GDP at current prices -Provides GDP at current prices = Nominal GDP  Real GDP -Used to measure growth in the economy -Nominal GDP cannot be used due to increases in price and not in physical numbers -Real GDP excludes inflation from the data -Also referred to constant prices  Per Capita real GDP -Real GDP figure divided by population number -It pop growths faster effect standard of living -Figure used to compare standard of living to indicate economic development

Economic Indicators (Cont)  Employment - Full employment is the major economic objective and therefore we need to know the numbers of people willing to work. This group known as economically active population (EAP)  Economically active population (EAP) -Consists of people between the ages of 15 – 65 and includes -Workers in the formal and informal sectors -Self-employed people -Unemployed people  Employment - The number of employed people expressed as a % of the EAP gives the employment rate. - Used to measure trends, but we usually use unemployment rates  Unemployment - Published by Stats SA. Uses strict definition as per international labour office. Definition includes people who Have not worked for seven days prior to the survey interview Want to work and are able to start within a week of the survey interview Have taken steps to look for work or become self employed in four weeks prior to the survey interview

Economic Indicators (Cont)  Inflation -When majority of prices continuously increase it is called inflation. -Inflation affects the purchasing power of consumers and is monitored by means of the Producers Price Index (PPI) and Consumers Price Index (CPI)  Producers Price Index (PPI)  Measures prices of locally produced goods and imports  PPI consist of a basket of local and imported goods and is used to predict consumer inflation  Consumer Price Index (CPI)  Shows price increases of a basket of goods purchased by a typical consumer  SA uses two; CPI and CPIX  CPIX for inflation targeting (3-6%)

Economic Indicators (Cont)  Foreign Trade  Terms of Trade  The ratio of X and M prices  Serves as a warning that a change in the BOP may follow  The Exchange Rate  The price of one currency in terms of another  Changes in the exchange rate affects the prices that are paid for M and the income earned from exports  M and E monitor exchange rates of the currencies of the countries they trade with

Economic Indicators (Cont)  Productivity  Defined as the relationship between output and input of factors of production  The one which is important is labour productivity  Labour productivity  It is output per worker in a particular period of time  Measured by dividing real GDP by the number employed  Increased productivity can lead to economic growth and increases the standard of living  Important to watch level of productivity as well as rate of change  Remuneration per worker  Wage levels and productivity levels has an impact on the price of goods and services  If increase in real wages is higher than labour productivity, prices of goods will rise causing inflation

Economic Indicators (Cont)  Monetary indicators  The money supply  Increase in money supply will lead to increase in inflation  Reserve Bank normally increases interest rate to curb inflation  An increase in supply of money indicates an upswing and decrease in supply of money a downswing in economy  Interest rates  Interest rate price we pay for borrowed money  It is also income received on investments  Interest rate based on repo rate – the rate at which commercial banks borrow money from the Reserve Bank  Prime overdraft rate is the lowest rate a commercial bank charges its customers  Interest rate used to curb inflation in SA  Interest rates are increased or decreased by bases points  (1% = 100 basis points)

SOCIAL INDICATORS  Are concerned with people and take the well-being of the nation into account  Income Distribution  Measured by the Gini-coefficient  Measures the inequality in the distribution of income amongst the population  Govt uses progressive taxes to redistribute income and policies to create opportunities for earning higher income  SA coefficient 0.5 (uses progressive tax and BEE)  Demographics  Looks at the size of the population  NB to Govt for infrastructure development and implementing social programmes  Two factor NB; Population growth and Life expectancy  Life expectancy indicates to Govt the tax base and labour force available

 Nutrition and Health  It influences labour productivity  Has impact on health care services and is funded both by public and private sectors  Indicators include Child nutrition = weight for age (malnutrition) Infant mortality = death before 5 yrs old Health expenditure = measured as % of GDP Access to safe drinking water = % of population Access to sanitation = % of population  Education  Influences your level of income and standard of living  Also affects the country’s productivity, competitiveness and national welfare  Indicators include Adult literacy = adults can read and write School enrolment percentages = % children attending school Education expenditure = % of GDP (3%) SOCIAL INDICATORS (Cont)

 Housing  Look at the type of dwelling in which people live (formal vs informal)  High % of formal dwellings the country is seen as having a high level of development  In SA many cannot afford formal housing therefore the Dept of Housing provides and this is an indicator of service delivery  Services  This enhances peoples lifestyles  This includes: Electricity Refuse disposal Clean water supply Sanitation – flush or chemical toilets SOCIAL INDICATORS (Cont)

INTERNATIONAL STANDARDISATION  To obtain financial aid form international organisations countries must compile their indicators in a specific way  IMF  Provides bridging finance for BOP deficits  Focus on public finance accounting  The World Bank  Largest source of development Aid  Publish their definitions in the World Development Indicators and the African Development indicators

INTERNATIONAL STANDARDISATION (Cont)  The United Nations  Can provide aid for children through its children’s fund  In recent times agencies have asked for more indicators when applying for funding  These are: Human rights = children’s rights, labour rights, gender discrimination, racial discrimination and crime Environmental indicators = pollution Governance indicators = highlights corruption, nepotism and democratisation