Structural Adjustments in the South African Economy Presented by: Dawie Roodt 22 May

Contents  Fiscal Policy  Monetary Policy  Balance of Payments  Economic Growth  Employment  Africa and Us  Asset allocation

Fiscal Policy

State Finances

Almost Zero

State Finances

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

Monetary Policy

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

Inflation

Interest rates

Results  Interest rate stability  Better business environment  Lower cost of capital  Strong demand

Balance of Payments

Results  Access to international capital  World integration  International competitive

Real Economy

GDP Components

GDP

Results  Job creation  Increased prosperity

Labour

2005 SA formal employment growth of 4.5% (best in years!) SA economy need to grow: –6.5% to halve narrow unemployment by 2014 –9.3% to halve broad unemployment by 2014 Narrow definition: 4.25m unemployed To halve this number by 2014: – jobs per year To generate 1% employment growth SA needs: –2006: 2.3% GDP growth –1980’s: 1.6% GDP growth

Labour

Results  Higher productivity  Lower burden on state

A comparison

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

AIDS Source: UNAIDS

GDP Source: UN

Countries Compared to Provinces Source: UN

Mistakes made in Africa Idolise Leaders Marketing Boards Nepotism Incompetence Corruption Poor Fiscal Discipline Too Relaxed Monetary Policy Unrealistic Projects ????????

Local Equities Allocation, 2006