Ben Smit 6 November 2002
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Transcript of Ben Smit 6 November 2002
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Ben Smit6 November
2002
Prospects for the World & SA economies
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Outline
Global economic outlook
Domestic economic prospects
Manufacturing sector survey
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Global economic outlook
Initially unexpectedly strong recovery to 2002 and 9/11 slowdown
Industrial recovery has stalled
US consumer confidence declines again
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Recovery in the US industrial sector has stalled…
35
40
45
50
55
60
Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02
Oct 2001
PMI / ISM
Sept 2002
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US consumer confidence weaker …
60
80
100
120
Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02
Sept 2002
Michigan survey
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World economic outlook: the growth numbers (JP Morgan)
2001 2002 2003
Real GDP growth
USA 0.3 2.3 (3.0)
2.7 (3.3)
Euro area 1.4 0.8 (1.3)
1.9 (3.1)
Japan -0.3 -0.8 (-0.3)
0.3 (1.7)
Asia excl Japan 3.7 5.3 (5.4)
5.5 (5.8)
Latin America 0.2 -1.5 (-1.0)
0.1 (3.1)
Global: developed
0.7 1.2 (1.7)
2.0 (2.9)
Global: emerging
2.2 2.8 (2.8)
3.4 (4.7)
( ) = May 2002 forecast
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Recent SA developments
Growth slowed in 2001 (from 3.4% 2.2%) but economy proved resilient
Real sector activity surprisingly strong in Q3
Exchange rate relatively stable around R10.50/$
Inflation rates keep surprising
400 basis point interest rate increase
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RMB/BER Business Confidence Index
0
20
40
60
80
100
1986 1988 1990 1992 1994 1996 1998 2000 2002
Recent SA developments(continued)
•From 68 in 02Q2 to 68 in 02Q3
•Manufacturing (69 (69))
•Building (45 (42))
•New vehicles (54 (67))
•Retail (69 (69))
•Wholesale (89 (91))
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-50
-25
0
25
50
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
• Consumer sentiment slightly weaker in 2002Q3
• Still holding up relatively well
FNB/BER Consumer Confidence Index
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Purchasing Managers Index
INVESTEC PMI
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Sep-99 Jan-00 May-00 Sep-00 Jan-01 May-01 Sep-02 Jan-02 May-02 Sep-02
qoq
% c
hang
e
45
50
55
60
65
inde
x
Man GDP qoq% Investec PMI SA
October
2002
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South Africa’s inflation trend
0
5
10
15
20
25
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03
% c
hang
e on
pre
vious
per
iod
CPI PPI
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Current SA conditions:R/$ exchange rate
Rand/$ Exchange Rate: Valuation
-60
-40
-20
0
20
40
60
Jan-70 Jan-74 Jan-78 Jan-82 Jan-86 Jan-90 Jan-94 Jan-98 Jan-02
under
(-) /
ove
r(+
)
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Outlook: Inflation
2
4
6
8
10
12
14
16
90 92 94 96 98 00 02 04
PPI CPI
Current 11.8 (CPIX), 12.5 (CPI), 15.4 (PPI)
Exchange rate impact to pass
Food prices Longer term anchors
– International competition & low world inflation
– Conservative fiscal policy– Inflation targeting
Forecast
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Outlook: Economic growth
-3
-2
-1
0
1
2
3
4
5
90 92 94 96 98 00 02 04
GDP real growth
Stable growth since 1994
Export growth essential
Upswing form 1999 to 2004/5 (?)
Employment growth essential for domestic response
Forecast
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Outlook: the numbers
2001 2002 2003 2004
Final consumption exp
2.8 3.0 2.9 3.5
Fixed investment 3.3 5.4 5.2 7.6
Exports 2.4 1.8 5.7 7.3
GDP 2.3 2.7 3.0 3.5
CPI 5.7 9.6 7.4 3.7
CPIX 6.6 9.6 7.3 5.4
Prime Rate (eop) 13.00 17.3 15.5 14.5
R/$ (eop) 8.60 10.55 11.24 11.66
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Highlights:Third quarter 2002
Confidence remains at a high level
Solid increase in domestic sales, better
than expected
Export sales edge higher
Decline in stock levels
Small rise in employment, first in 7 years
Rise in actual fixed investment and
intentions
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0
10
20
30
40
50
60
70
80
90
100
1985 1987 1989 1991 1993 1995 1997 1999 2001
Manufacturing TotalBusiness Confidence Index
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-60
-40
-20
0
20
40
60
97 98 99 00 01 02
Domestic sales volumes
Expected
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Domestic sales volumes(BER survey: 02Q3 compared to 01Q3)
-40 -20 0 20 40 60 80 100
FURNITURE
FOOTWEAR
TRANSPORT EQP
PRINTING
RUBBER
CHEMICALS
PLASTIC
MACHINERY
METALPRODUCTS
PAPER
TOTAL
ELEC. MACHINERY
CLOTHING
NON-METAL MIN
TEXTILES
BASIC METALS
FOOD
WOOD
BEVERAGES
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Export sales volumes
-30
-20
-10
0
10
20
30
40
50
97 98 99 00 01 02
Expected
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Export sales volumes(BER survey: 02Q3 compared to 01Q3)
-40 -20 0 20 40 60 80 100
PRINTING
FOOTWEAR
VEHICLES
CHEMICALS
ELEC. MACH
METALPROD
MACHINERY
TOTAL
FOOD
TEXTILES
BASIC METALS
BEVERAGES
PAPER
PLASTIC
FURNITURE
NON-MET MIN
CLOTHING
WOOD
RUBBER
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Current stocks of finished goods
-10
0
10
20
30
40
50
60
97 98 99 00 01 02
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Production volumes
-40
-30
-20
-10
0
10
20
30
40
50
60
97 98 99 00 01 02
Expected
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Number of factory workers
-70
-60
-50
-40
-30
-20
-10
0
10
97 98 99 00 01 02
Expected
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Number of factory workers(BER survey: 02Q3 compared to 01Q3)
-100 -80 -60 -40 -20 0 20 40 60
FOOTWEAR
PRINTING
VEHICLES
FOOD
PAPER
METALPROD
ELEC. MACH
BEVERAGES
CHEMICALS
RUBBER
TOTAL
BASIC METALS
FURNITURE
MACHINERY
TEXTILES
PLASTIC
NON-MET MIN
WOOD
CLOTHING
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Fixed Investment
-20
-10
0
10
20
30
40
97 98 99 00 01 02
Expected
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Real fixed investment: 2002Q3(machinery & equipment: 12 month outlook)
-40 -20 0 20 40 60 80
BEVERAGES
FOOTWEAR
CLOTHING
RUBBER
FOOD
PRINTING
ELEC. MACHINERY
WOOD
MACHINERY
NON-METAL MIN
TOTAL
PLASTIC
METALPRODUCTS
FURNITURE
TRANSPORT EQP
PAPER
CHEMICALS
BASIC METALS
TEXTILES
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Western Cape
Domestic sales & export sales
-60
-40
-20
0
20
40
60
80
M-98 M-99 M-00 M-01 M-02
-40
-20
0
20
40
60
80
Domestic sales Export sales
Expected
Business Confidence
0
20
40
60
80
100
96 97 98 99 00 01 02
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Eastern Cape
Domestic sales & export sales
-80
-60
-40
-20
0
20
40
60
80
M-98 M-99 M-00 M-01 M-02
-60
-40
-20
0
20
40
60
80
Domestic sales Export sales
Expected
Business Confidence
0
20
40
60
80
100
96 97 98 99 00 01 02