Agenda

1
Budget 2002 Robust injection or damp squid?
Economics Division
2
All fall down
GDP, annual percent change
Excluding China India, Dev. country GDP is
likely to be below 3 in 2002
Developing countries
World
South Africa
USA
1995
1996
1993
1994
1999
2000
1997
1998
2001
2002
3
Global downturn bites
Quarter on quarter, seasonally adjusted, at 1995
prices
Gold exports
Merchandise imports
SA mirrors slump in global trade
Merchandise exports
2000
2001
4
Room for fiscal stimulus
General government fiscal balance, of GDP
United States
Some are better placed to cushion downturn
Advanced economies
South Africa
Developing countries
1995
1996
1993
1994
1999
2000
1997
1998
2001
2002
G7 nations
5
Household consumption expenditure
Q/Q, saar, at 1995 prices
per annum
HCE - left scale
Prime interest rate (inverted)
Falling interest rates help buoy spending
1998
1999
2001
1997
2000
6
Ratios of household spending and its determinants
7
Risk of wage spiral
Annual percentage change
Upward wage pressures ...
Nominal remuneration per worker
9.1
8.4
Productivity
7.0
and easing productivity
6.0
4.8
Nominal unit labour costs
4.0
equals accelerating unit labour costs
3.4
2.9
2.9
2000
2001
1999
data point refers to first half of 2001
8
Tightening monetary bias
Percentage change year on year
Prime lending rate
Inflation and interest rate risk weighted towards
the upside
Out of target
CPIX
inflation target
1998
2000
2001
1999
2002
9
Net capital formation
Nominal rand millions, 1991-2000
Combined 11 increase forecast over the MTEF
period, but its off a low base
10
Government capital investment to current
expenditure ratio
Percentage, as at 31 March, consolidated general
government
Will rise over the MTEF period
89
85
93
99
97
95
91
87
01
11
Real gross fixed capital formation
Q/Q, seasonally adjusted at annual rate
Investment across most sectors
Private sector
2000
2001
1999
1998
1997
1996
12
Real interest rates
Percentage per annum
Deflated by CPI
Still high historically
Deflated by CPIX
99
98
90
91
95
94
93
92
96
97
01
00
13
Profit squeeze
Percentage change year on year
Producer prices
Limited pass-through to consumers
Consumer prices
1999
2001
2000
14
Profit slump
Percentage change year on year
Gross operating surpluses
Reduced scope for investment
99
98
90
91
95
94
93
92
96
97
01
00
15
Investment and saving
Gross savings to GDP
Gross fixed capital formation to GDP
92
93
90
91
96
97
94
95
98
99
00
16
The end
gballim_at_sbic.co.za www.ed.standardbank.co.za
Economics Division