A Macroeconomic Perspective on Budget 2003 Dr Iraj Abedian Director & Group Economist Hearings on...
-
Upload
albert-bryant -
Category
Documents
-
view
215 -
download
0
Transcript of A Macroeconomic Perspective on Budget 2003 Dr Iraj Abedian Director & Group Economist Hearings on...
A Macroeconomic Perspective A Macroeconomic Perspective on Budget 2003on Budget 2003
Dr Iraj AbedianDirector & Group Economist
Hearings on the Appropriation Bill (Budget 2003/4)
The Parliament, Cape Town
March 5, 2003
Presentation outline
A global economy perspective
A national economy perspective
The 2003 Budget & its major macroeconomic aspects
Concluding remarks
A global perspective
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
United States
United Kingdom
EMU
Japan
Major economies in trouble
Real GDP growth in 2002
% q/q, seasonally adjusted and annualised
Source: Bloomberg
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
South Africa
Source: Statistics South Africa
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2003
United States United KingdomEMU Japan
RSA likely to outshine majors
Projected real GDP growth
% y/y
Source: IMF World Economic Outlook, September 2002
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2003 2004 2005
SBSA
Budget 2003
Source: Standard Bank Economics & Budget 2003
South Africa
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
United States United KingdomEMU Japan
Balance of Payments in healthy state…
Current account balance as a % of GDP
Source: OECD
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
South Africa
Source: SARB Quarterly Bulletin
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
1990
199119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
04
United States United KingdomEMU Japan
Global fiscal pressures on the rise…General government financial balances
Surplus (+) / deficit (-) as a % of GDP
Source: OECD
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
South Africa
Source: Various National Budgets
Global government debt rising…!
(% of GDP)General government gross financial liabilities
20
40
60
80
100
120
140
160
United States
United Kingdom
EMU
Japan
Source: OECD
40
50
60
70
80
90
100
110
2000 2001
Index January 2000 = 100Falling index equals US$ appreciation
2002
GBP/US$
EURO/US$
US$/ZAR
US$/JPY
Source: Bloomberg, Standard Bank Economics
2003
US$ falling compared to majors & Rand..
40
50
60
70
80
90
100
110
2001
Index January 2001 = 100Falling index equals US$ appreciation
2002
AUD
BRL
ZAR
PZL
Source: Bloomberg, Standard Bank Economics
2003
US$ falling compared to select minors:
A national economy perspective
-4
-2
0
2
4
6
8
10 % per annum
1970s 1980s1960s
Source: Statistics South Africa & Standard Bank Economics
1990s 2000s
Turning
pointForecast
Secular turn in RSA GDP growth
SA’s rising economic resilience
Pillar One:
Reinforced by Structural Changes,
South Africa’s Economic Efficiency is rising……
Structural changes have transformed the economy….
0
10
20
30
40
50
60
70
1950s 1960s 1970s 1980s 1990s 2002
Primary Secondary Tertiary
% share of total GDP
Source: SARB Quarterly Bulletin; Statistics South Africa
10
15
20
25
30
35
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
SA’s rising export levels & rising competitiveness
Total exports to GDP
Source: SARB Quarterly Bulletin
6967
6463
61
5651484645
40333231
242120191713119876543
21
0 1 2 3 4 5 6 7 8
TurkeyIndonesia
RussiaArgentina
PhilippinesColumbia
PolandIndia
BrazilMexico
Czech RepublicChina
South AfricaThailand
IrelandSouth Korea
ChileIsrael
Hong KongJapanBritain
NorwayCanada
AustraliaSwitzerland
SwedenSingapore
TaiwanFinland
United States
Source: World Economic Forum
Competitiveness rankings
SA’s rising economic resilience
Pillar Two:
SA’s export diversification paying off
17
0
10
20
30
40
50
60
70
80
90
100
1996 1997 1998 1999 2000 2001 2002
20
22
24
26
28
30
32
34
36Non-resources exportsNet gold exportsExports to GDP
South Africa’s declining dependence on commodities, amid increased export orientation
Exp
ort/G
DP
ratio
AverageQ1-Q3
Increased manufacturing orientation of SA Exports
10
20
30
40
50
60
70
80
90
1991-1995
Shares in total exports, 1995 prices
1996-2000
Source: TIPS
Mining Manufacturing
SA’s rising economic resilience
Pillar Three:
Macroeconomic Stability & Solid Fiscal Conditions
SA: real GDP & rising fixed investment
-2
0
2
4
6
8
10
2000
Percent change q/q, seasonally adjusted and annualised
2001 2002
Source: SA Reserve Bank
Gross fixed investment
Government expenditure
Household consumption expenditure
GDP
Inflationary Trends Declining…
Source: Statistics South Africa, Standard Bank Economics
0
5
10
15
20
25%
CPI
PPI
80 82 84 86 88 90 92 94 96 98 00 02 2000 2001
%
CPI
PPI
2002 2003
Forecast
Secular downtrend temporarily restrained
2
4
6
8
10
12
14
16
2
6
10
14
18
22
26
Feb-98 Feb-99 Feb-00 Feb-01 Feb-02 Feb-03
Percent per annum
Real prime -deflated by CPIX
Nominal prime
Forecast
SA’s declining interest rates outlook
CPIX
Real prime forecast based on updated
CPIX forecasts and current Alt 2
interest rate outlook
0
5
10
15
20
25
1999 2000 2001 2002 2003
Prime Repo
SA’s attractive yield draws inflows…
RSA nominal interest rates
Source: SBSA (EcoServ)
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
USA UKEMU RSA
Source: IMF World Economic Outlook, Consensus Economics & SBSA
Real interest rates% %
-20
-10
0
10
20
30
40
50
Tu
rke
y
Bra
zil
Ve
ne
zue
la
Ru
ss
ia
So
uth
Afr
ica
Ind
on
es
ia
Cro
ati
a
Me
xic
o
Eg
yp
t
Ph
ilip
pin
es
Co
lom
bia
Po
lan
d
Isra
el
Ind
ia
Arg
en
tin
a
Hu
ng
ary
So
uth
Ko
rea
Pe
ru
Ma
lay
sia
Ch
ile
Cze
ch
Re
pu
blic
Th
aila
nd
Ta
iwa
n
Ho
ng
Ko
ng
Sin
ga
po
re
Interest rates GDP
Emerging markets comparison:short-term interest rates & GDP (Q3/02, %Y/Y)
40
50
60
70
80
90
100
110
2000 2001
Index January 2000 = 100Falling index equals rand depreciation
2002
Euro/ZAR
GBP/ZAR
US$/ZAR
ZAR/JPY
Source: Bloomberg, Standard Bank Economics
R13/86/$ on 20 Dec 2001
2003
ZAR against primary currencies
SA’s rising economic resilience
Pillar Four:
Deepening Democracy & Social Stability