1. TIPS DEVELOPMENT DIALOGUE SEMINAR South Africa and the Credit Crunch Ben Smit Bureau for Economic Research University of Stellenbosch 15 May 2009

2. Outline SA already in cyclical slowdown when crisis struck Financial indicators Real indicators Overall expected impact

3. SA cyclical slowdown: GDP growth rate

4. SA cyclical slowdown: RMB/BER BCI 2009Q1 Business confidence declined from 33 in 08Q4 to 27 in 09Q1 Manufacturing 31  16 Building 42  33 New vehicles 0  5 Retail 49  52 Wholesale 44  31

5. Financial impact: Portfolio capital flows Oct ‘08

6. Financial impact: Exchange rates Oct ‘08

7. Financial impact: JSE share prices

8. Financial impact: Share prices: Global vs SA

9. Liquidity provided by central banks (2007 – 2008)

10. Real sector: Exports decline sharply Jan/Feb ’09 vs Jan/Feb ‘08 Jan/Feb ’09 vs Nov/Dec ‘08 Contribution to ’08 total exports Vehicle and Transport Equipment-7.65%-47.90%10.3% Machinery, Mechanical Appliances & Electrical Equipment -27.06%-28.68%9.8% Mineral Products (Total)36.37%16.66%18.0% Mineral Products (Coal only)59.23%-25.10%5.9% Diamonds-63.21%-25.85%2.3% Gold25.94%-13.42%6.9% Platinum-38.26%-20.88%12.1% Base Metals & Articles thereof-32.91%-19.20%17.3% Chemical Products-5.03%-26.33%7.1% Food & Agricultural Categories48.41%11.76%7.2% Total Exports-5.03%-26.33% Source of basic data: Customs & Excise

11. Real sector: Manufacturing: Investec PMI vs Prod Vol

12. Real Sector: Manufacturing PMI: SA vs Global Expansion Contraction

13. Real sector: BER Manufacturing Survey: Export volumes changes Expected -54

14. Real sector: BER manufacturing survey: Domestic sales volume changes Expected -65

15. Real sector: BER manufacturing survey: Production volume changes Expected -63

16. Real sector BER manufacturing survey: Investment changes Expected -23

17. Real sector: BER manufacturing survey: Expected total fixed investment in 12 months time -8

18. Real sector: BER Surveys: Number of people employed -26 -50 -44

19. Real sector: BER manufacturing survey: Numbers employed vs hours worked -67 -43

20. Monetary policy response

21. Fiscal Policy response Budget more expansive than expected, unlikely to prevent sharp growth slowdown Budget may benefit SA focused construction companies, non-durable retailers (social grant increases, 45% of personal tax relief for people with taxable income below R150k p.a.) Extension of child support grant to 15 – research being done of feasibility of further extension to 18 years of ago Massive public sector investment (R787 over MTEF) key growth support, but also risks (offshore funding constrained in current environment) – Acsa already hinted may spend less

22. Overall SA impact of the global crisis/recession in 2009 08Q309Q2 South Africa*** - GDP growth3.2-0.8 - Export growth6.7-9.1 Global GDP growth - World - IMF**3.0-1.3 - JPM*2.3-2.6 - Advanced countries - IMF**0.5-3.8 - JPM*1.4-3.4 - Emerging markets - IMF**6.11.6 - JPM*6.00.2 *Aug ’08 vs May ’09 **Oct ’08 vs April ’09 *** BER forecast

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