Movers and Shakers in the South African Economy Presented by: Dawie Roodt 3 August 2006

Movers

Real Economy

GDP

Results  Job creation  Increased prosperity

Fiscal Policy

State Finances

Results  Lower interest payments  More social expenditure  Better ratings  Strong demand

Shakers

Monetary Policy

Interest rates

Inflation

Exchange rates Rand

Rand Valuation Gold $800 Rubicon Stock exchange crash ANC, Reds fall Election Exchange controls Asian crises Wakefordgate Rus, Zim, Arg Fin Rand NOFP + NOFP -

Financial

Disposable income of households Source: SARB

Household debt to disposable income Source: SARB

Savings to disposable income of households Source: SARB

Debt Servicing Cost

Commodity Prices

Balance of Payments

Results  Interest rates climbing  Inflation jumps slightly  Large current account deficit  Commodity prices – effect on businesses and inflation outlook  Currency exposed to global volatility  Alarming increase in PSCE  Stellar household debt/disposable income  Lack of ‘savings culture’ by households

SA Business Cycle (months)

SA Business Cycle (months)

SA Business Cycle  Longest upwards phase on record (Sept ’99 - ?)  Business cycle phases since 1945 (Post war):  Upward phases (15)  Duration in months: 441  Downward phases (14)  Duration in months: 285

A comparison

Percentage of World GDP ‘04 Source: UNAIDS

4% of African area 23% of African GDP 21.2% of African Exports

GDP Source: UN

Countries Compared to Provinces Source: UN

AIDS Source: UNAIDS

Mistakes made in Africa Private Property Rights Regulated Prices Idolise Leaders Marketing Boards Nepotism Incompetence Corruption Poor Fiscal Discipline Poor Monetary Policy Unrealistic Projects ????????

Agriculture

SA Field crops: Gross value of production 2003 (Rbn.) Source: Department of Agriculture

Top 14 world maize producers United States of America 280,228,400 China 132,645,000 Brazil 34,859,600 Mexico 20,500,000 Argentina 19,500,000 India 14,500,000 France 13,226,000 Indonesia 12,013,710 South Africa 11,996,000 Italy 10,622,000 Romania 9,965,000 Hungary 9,000,000 Canada 8,392,000 Ukraine 7,100, , Million TonsCountry Source: FAO of UN

World crops, 2004, m hectares Source: Food and Agriculture Organisation

Asset Allocation

Reason Equities Demand/Rand/International BondsInflation/Supply CashShort Interest rates PropertyProperty Cycle – Heavy Overweight – Overweight – Neutral – Underweight – Heavy Underweight

Local Equities, 2006 Economic Sector MCEAAJSE Sector Mining and Quarrying3234%Mining, Platinum, Gold, Coal Finance, prop and bus. serv 3024% Banks, Insurance, Life Ass, Media & Pht, IT, Property, Support Serv Manufacturing 1214% Auto, Basic Ind, Beverages, Chem, Elect, IT Hard, Pharm & Bio, Steel & Other Personal Service 65% Cyc Serv, Health, Leisure Ent, Non-cyc Serv, Person Care Transport, storage and comm. 67% Telecomm, Transport Trade, hotels and restaurants 64% Cyc Cons, Food & Drug, Gen Retail, House Goods, Non-cyc Cons Electricity, gas and water 43% Oil & Gas Agri, Forestry and Fishing 31% Food Prod Construction 28% Const & Build %

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