2. The SA Economy and Lessons from Africa Presented by: Dawie Roodt 30 October 2006

3. Real Economy

4. GDP

6. Relative size to GDP, 2006 Q2

7. Fiscal Policy

8. State Finances

10. Monetary Policy

11. Inflation

12. Inside The Economist’s Head  Constructing Econometric Models:  Economic theory  Obtaining the data  Statistical significance (Tests)  Long Term Trend  Short Term Trend  Construct model  Forecasting properties

13. Economic Theory  Theoretic Drivers of Inflation:  Fuel prices  Interest rates  Exchange rates  Private credit  Consumer spending  Cost of production

14. Efficient Inflation Model

15. MonthActualEfficient ModelDifference January4.0 0.0 February3.94.1-0.2 March3.43.6-0.2 April3.33.5-0.2 May3.94.2-0.3 June4.94.60.3 July5.05.1-0.1 August5.45.30.1 September5.35.6-0.3

16. Interest rates

18. Capital Expenditure InstituteTime HorizonPlanned Capital Expenditure Sasol2006R20.0bn Eskom2011R97.0bn World Cup 2010: Gautrain Acsa Stadiums 2010 2009 2010 R20.0bn R3.0bn R5.0bn Transnet2009R32.7bn State (National Budget)2009R372.0bn

19. Economic Impact of the 2010 FIFA World Cup  Direct expenditure of R12,7 billion;  Contribute R21,3 billion to the GDP of South Africa;  Generate the equivalent of 159 000 annual jobs  Additional R7,2 billion will be paid to Government in taxes. Source: Gauteng Tourism Authority

20. Debt Levels

21. Credit Extension

22. Household debt to disposable income Source: SARB

23. Savings to disposable income of households Source: SARB

24. Balance of Payments

26. Trade: Imports and Exports per origin, 2005

27. A comparison Retail Trade Sector

28. Percentage of World GDP ‘04 Source: UNAIDS

29. 4% of African area 23% of African GDP 21.2% of African Exports

30. GDP Source: UN

31. Countries Compared to Provinces Source: UN

32. AIDS Source: UNAIDS

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

34. The Zim disaster

35. Development Data & Statistics 2004WorldSouth AfricaZimbabwe GDP (current US$, bn)41 365.8214.74.7 GNI per capita (current US$)6 338.03 670.0620.0 Life expectancy (years)67.344.637.2 Population, total (millions)6 363.245.512.9 Population growth (annual %)1.2-0.70.6 Surface area (000, sq km)133 940.91 219.1390.8 Source: World Bank

36. Zimbabwe: GDP Source: IMF

37. Zimbabwe: GDP Source: IMF

38. Zimbabwe: Inflation Source: IMF

39. Zimbabwe GDP, Current Prices, Zim$ 2000 Zim$361.4 bn 2005 Zim$75,421.1 bn +20,798.0%

40. Zimbabwe GDP, Current Prices, US$ 2000 $8.1bn 2005 $4.5bn Source: IMF -44.0%

41. Commodity Analysis

42. Changes in Energy Sources

43. Largest Populations Source The economist Pocket word in figures 2007 1950, Mil2004, Mil2050, Mil 1. China5501. China13131. India1593 2. India3582. India10812. China1392 3. USA1583. USA2973. USA395 4. Russia1034. Indonesia2234. Pakistan305 5. Japan845. Brazil1815. Indonesia285

44. Biggest Economies, $bn PPP Source The economist Pocket word in figures 2007 1. USA11 651 2. China7 642 3. Japan3 737 4. India3 390 5. Germany2 336

45. Energy Use, million tons oil equivalent 2004 1.USA 2 280 2.China1 409 3.Russia639 4.India553 5.Japan517 2050* 1.India12 231 2.China10 692 3.USA3 033 4.Russia443 5.Japan436 *Assuming China and India use same energy per capita as the USA currently, remainder constant per capita use Source The economist Pocket word in figures 2007

46. Some Commodity Facts: Top producers Gold (tonnes) 1.South Africa340.4 2.Australia259.0 3.USA258.0 Platinum (tonnes) 1.South Africa154 2.Russia26 3.North America10 Palladium (tonnes) 1.Russia127 2.South Africa78 3.North America23 Source The economist Pocket word in figures 2007

47. Some Commodity Facts: Coal Top Producers 1.China989.8 2.USA567.2 3.Australia199.4 4.India188.8 5.South Africa136.9 6.Russia127.6 7.Indonesia81.4 8.Poland69.8 Top Consumers 1.China956.9 2.USA564.3 3.India204.8 4.Japan120.8 5.Russia105.9 6.South Africa94.5 7.Germany85.7 8.Poland57.7 Source The economist Pocket word in figures 2007

48. Some Commodity Facts: Aluminum Top Producers 1.China6 689 2.Russia3 594 3.Canada2 592 4.USA2 517 5.Australia1 895 6.Brazil1 457 7.Norway1 322 8.South Africa864 Top Consumers 1.China6 043 2.USA5 800 3.Japan2 319 4.Germany1 795 5.South Korea1 118 6.Russia1 020 7.Italy987 8.India861 Source The economist Pocket word in figures 2007

49. Asset Allocation

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

51. Local Equities, 2006 Economic Sector MCEAAJSE Sector Mining and Quarrying32%33%Mining, Platinum, Gold, Coal Finance, prop and bus. serv30%25% Banks, Insurance, Life Ass, Media & Pht, IT, Property, Support Serv Manufacturing12%16% Auto, Basic Ind, Beverages, Chem, Elect, IT Hard, Pharm & Bio, Steel & Other Personal Service6%5% Cyc Serv, Health, Leisure Ent, Non-cyc Serv, Person Care Transport, storage and comm.6%7%Telecomm, Transport Trade, hotels and restaurants6%4% Cyc Cons, Food & Drug, Gen Retail, House Goods, Non-cyc Cons Electricity, gas and water4%3%Oil & Gas Agri, Forestry and Fishing3%1%Food Prod Construction2%6%Const & Build 100%

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