economics division
DESCRIPTION
MTBPS: Right mix, right time. Goolam Ballim Financial Markets Economist. Economics Division. Presentation outline. Timing. Policy mix. GDP, annual percent change. Excluding China & India, Dev. country GDP is likely to be below 2.5% in 2002. Developing countries. World. South Africa. - PowerPoint PPT PresentationTRANSCRIPT
Economics Division
Goolam Ballim
Financial Markets Economist
MTBPS:MTBPS:Right mix, right timeRight mix, right time
Presentation outline
– Timing
– Policy mix
Synchronised slowdown
0
1
2
3
4
5
6
7GDP, annual percent change
1995 19961993
Developing countries
1994
Worl
d USASouth Africa
1999 20001997 1998 2001 2002
Excluding China & India, Dev. country
GDP is likely to be below 2.5% in 2002
* United States, European Union & Japan
Room for fiscal stimulus
-10
-8
-6
-4
-2
0
2
1995 19961993 1994 1999 20001997 1998 2001 2002
General government fiscal balance, % of GDP
Developing countries
Advanced economies*United States
South Africa
Global disinflation
0
2
4
6
8
10
12
0
10
20
30
40
50
60%
USA
South Africa
* United States, European Union & Japan
1995 19961993 1994 1999 20001997 1998 2001 2002
Advanced economies*
%
Developing countries - right scale
0
2
4
6
8
10
12
14
16
18
20
Global monetary easing
2000 20011999
Central bank rates, % per annum
South Africa
United KingdomUnited States
EMU
11 Sept
Japan
Policy mix
Policy mix
– Major drivers of growth: 1) private sector & government capital spending;
Net capital formation by organisation 1991 to 2000
Capital formation
-50000
0
50000
100000
150000
200000
Generalgovernment
Publiccorporations
Private businessenterprises
Rand millions, nominal values
Quarter-on-quarter percentage change
Seasonally adjusted at annual rate
Real gross fixed capital formation
-30
-20
-10
0
10
20
30
Private sector
Total
2000 20011999199819971996
Policy mix
– Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates;
• SA likely to sustain disinflationary trend
SARB to lower rates further
• Supported by:
• 1. Slow growth in nominal labour costs, due to moderate wage increases and brisk productivity growth
• 2. Continued liberalisation of SA economy
• 3. Excess capacity over aggregate demand
0
5
10
15
20
25Percentage change year on year
CPIX
Prime lending rate
3-6% inflation target
2000 20011998 1999 2002
Policy mix
– Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates;3) declining tax rates;
21.0
22.0
23.0
24.0
25.0
26.0
27.0
1996 1997 1998 1999 2000 2001
Tax burdenGeneral government tax revenue, (% of GDP)
– Easing tax burden over the coming years, particularly for individuals
Policy mix
– Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates;3) declining tax rates;4) consistent export drive and export diversification;
-15
-10
-5
0
5
10
GDP GDE
Quarterly change, seasonally adjusted and annualised
1997 20011998 1999 2000
GDP & GDE
5
10
15
20
25
30
35
40
45
50
1996 1997 1998 1999 2000 2001
Exports to GDPResources exportsNet gold exports
Resources and net gold exports as a percentage of total exports
SA’s declining dependence on commodities amid increased exports
Policy mix
– Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates - long- and short-term rates;3) declining tax rates;4) consistent export drive and export diversification;5) macroeconomic stabilisation and policy credibility.
Policy mix
– Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates - long- and short-term rates;3) declining tax rates;4) consistent export drive and export diversification;5) macroeconomic stabilisation and policy credibility.
– Low dependency on FDI reduces the probability of severe economic slowdown.
FDI Stocks
0
200
400
600
800
1000
1200
1400
1980 1985 1990 1995 1999 2000
Africa
Latin America & Caribbean
Asia & Pacific
South Africa
$ billion
