The South African Economy Presented by: Dawie Roodt 14 September 2006

The South African Economy

Presented by:Dawie Roodt14 September 2006

Real Economy

GDP

GDP

-3

-2

-1

0

1

2

3

4

5

6

7

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

%

GDP

GDP per capita '00

20000

21000

22000

23000

24000

25000

26000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

R

Relative size to GDP, 2006 Q2

2% 6%

16%

2%

3%

14%

10%

21%

12%

5%

9%

Agri, forestry and fishing Mining and quarrying Manufacturing Electricity, gas and waterConstruction Wholesale and retail Transport, storage Finance, real estate General gov services Personal services Taxes less subsidies

Fiscal Policy

State Finances

Revenue/Expenditure:GDP

20

21

22

23

24

25

26

27

28

29

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

%

State Finances

Deficit:GDP

-8

-7

-6

-5

-4

-3

-2

-1

0

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

%

State Finances

State Debt:GDP

25

30

35

40

45

50

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

%

Debt trapRecovery

Normal Normal

State Finances

General State (Dis-) Saving

-30

-25

-20

-15

-10

-5

0

5

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

R bn

Monetary Policy

Inflation

CPI & PPI

0

3

6

9

12

15

18

21

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

%

Inflation

CPI , CPI:Food and PPI:Food(agri)

-16-12

-8-4048

121620242832

1990 1992 1994 1996 1998 2000 2002 2004 2006

%

Interest rates

Prime

9

11

13

15

17

19

21

23

25

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

%

De Kock

Stals

Mboweni

Interest rates

Prime

10.0

10.5

11.0

11.5

12.0

12.5

13.0

2005 2006 2007

%

?

Exchange rates

R/$ and $/Euro

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Jan-03 Jan-04 Jan-05 Jan-06 Jan-071

1.04

1.08

1.12

1.16

1.2

1.24

1.28

1.32

1.36

1.4

R/$ $/Euro

Prime and PSCE

Instalments, Morgages and Prime

-2.00

2.00

6.00

10.00

14.00

18.00

22.00

26.00

30.00

34.00

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

%

0

5

10

15

20

25

30%

Mortgages

Individuals, Non-Indiviuals and Prime

-2.002.006.00

10.0014.0018.0022.0026.0030.0034.0038.0042.0046.0050.00

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

%

0

5

10

15

20

25

30

%

Motor Trade

Income from motor trade industry and Prime

0

5

10

15

20

25

30

35

2000 2002 2004 2006

%

0

3

6

9

12

15

18

21

%

Petrol Price

Petrol Price, ULP 93

0

100

200

300

400

500

600

700

800

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

cents

Capital Expenditure Institute Time Horizon Planned Capital Expenditure

Sasol 2006 R20.0bnEskom 2011 R97.0bnWorld Cup 2010:GautrainAcsaStadiums

201020092010

R20.0bnR3.0bnR5.0bn

Transnet 2009 R32.7bnState (National Budget) 2009 R372.0bn

Economic Impact of the 2010 FIFA World Cup

Direct expenditure of R12,7 billion; Contribute R21,3 billion to the GDP of South Africa; Generate the equivalent of 159 000 annual jobs Additional R7,2 billion will be paid to Government in taxes.

Source: Gauteng Tourism Authority

Debt Levels

Credit Extension

Private Sector Credit Extension

8

10

12

14

16

18

20

22

24

26

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07

%

Household debt to disposable income

Household debt to disposable income of households

30

35

40

45

50

55

60

65

70

75

1970 1975 1980 1985 1990 1995 2000 2005

%

Source: SARB

Debt Servicing Cost

Debt payment cost % of disposable income

0

2

4

6

8

10

12

14

16

Q1 94 Q1 95 Q1 96 Q1 97 Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07

%

Source: SARB

Savings to disposable income of households

Ratio of saving by households to disposable income of households

0

2

4

6

8

10

12

14

1970 1975 1980 1985 1990 1995 2000 2005

%

Source: SARB

Summary Strong capital expenditure Short term inflation risk (PPI) Interest rate in upwards cycle Currency less volatile Effect of interest rate on consumer spending

Building Statistics

Building: Non-Residential

Building Plans Passed: Total Value

-80

-60

-40

-20

0

20

40

60

80

100

120

Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06

%

0

150

300

450

600

750

900

1050

1200

1350

R mil

Building: Non-Residential

Building Plans Passed: Total Square Meters

-60

-40

-20

0

20

40

60

80

100

120


%

100

150

200

250

300

350

400

Sqm mil

Building Plans Passed: Office and Banking Space

Change in total value at current prices

-100

-50

0

50

100

150

200


%

Building Plans Passed: Shopping Space


-100

-50

0

50

100

150

200


%

Building Plans Passed: Industrial and Warehouse


-100

-50

0

50

100

150

200


%

Balance of Payments

Balance of Payments

Current Account vs Financial Account

-8

-6

-4

-2

0

2

4

6

8

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

% GDPBarclays/Absa

De Beers delisting

Sanctions liftedDebt Standstill

Shares Performance- Top 40 (price movement), 12 months

Best Performers % Worst Performers %

Anglo American Platinum

126.7 JD Group -18.8

Netcare 84.9 Edgars -17.1

Anglo American PLC

75.8 Aspen Pharmacare Holdings

-1.1

Impala Platinum 73.2 Absa Group Limited 0.1

Gold Fields 72.4 Pick ‘n Pay 0.4

A comparison

Percentage of World GDP ‘04

1%

33%

2%2%

4%5%5%

7%

11%

2%

28%

South Africa Rest of the World Brazil IndiaUK China France GermanyJapan Russia USA

Source: UNAIDS

4% of African area

23% of African GDP

21.2% of African Exports

GDP

Africa, South Africa, World GDP per Capita

0

1000

2000

3000

4000

5000

6000

7000

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

$

Source: UN

Countries Compared to Provinces

Country and Province GDP 2004 ($ Bn)

0 20 40 60 80 100 120 140 160 180 200 220

South AfricaEgypt

AlgeriaNigeria

GautengMorocco

KwaZulu-NatalWestern Cape

TunisiaAngolaSudan

Libyan ArabEastern CapeCote d'Ivoire

CameroonMpumalanga

KenyaLimpopo

North-WestFreestateTanzania

GhanaBotswana

EthiopiaUgandaSenegal

GabonDRC

MozambiqueMauritius

NamibiaZambia

Northern CapeMali

ZimbabweBurkina Faso

CongoBenin

MadagascarChad

GuineaSmallest 20

Source: UN

AIDS

People infected with Aids

20%

68%3%1%

4%

4%

Asia Africa Eastern Europe & Central Asia Caribbean Latin America High Income Countries

Source: UNAIDS

Mistakes made in Africa Private Property Rights Regulated Prices Idolise Leaders Marketing Boards Nepotism Incompetence Corruption Poor Fiscal Discipline Poor Monetary Policy Unrealistic Projects

?

?

?

?

Development Data & Statistics

2004 World South Africa Zimbabwe

GDP (current US$, bn) 41 365.8 214.7 4.7

GNI per capita (current US$) 6 338.0 3 670.0 620.0

Life expectancy (years) 67.3 44.6 37.2

Population, total (millions) 6 363.2 45.5 12.9

Population growth (annual %) 1.2 -0.7 0.6

Surface area (000, sq km) 133 940.9 1 219.1 390.8

Source: World Bank

Zimbabwe: GDP

Zimbabwe: GDP

-12

-10-8

-6-4

-20

24

68

10

1990 1992 1994 1996 1998 2000 2002 2004 2006

%

Source: IMF

Zimbabwe: GDP

Zimbabwe GDP per capita, Constant Prices

20000

22000

24000

26000

28000

30000

32000

34000

36000

38000

1990 1992 1994 1996 1998 2000 2002 2004 2006

Zim $

Source: IMF

Zimbabwe: Inflation

Zimbabwe: Inflation

0100200300400500600700800900

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

%

Source: IMF

Asset Allocation

Asset Allocation Reason

Equities Demand/Rand/International

Bonds Inflation/Supply

Cash Short Interest rates

Property Property Cycle

– Heavy Overweight

– Overweight

– Neutral

– Underweight

– Heavy Underweight

Local Equities, 2006Economic Sector MC EAA JSE Sector

Mining and Quarrying 32 34% Mining, Platinum, Gold, Coal

Finance, prop and bus. serv 30 24%Banks, Insurance, Life Ass, Media & Pht, IT, Property, Support Serv

Manufacturing 12 14%Auto, Basic Ind, Beverages, Chem, Elect, IT Hard, Pharm & Bio, Steel & Other

Personal Service 6 5%Cyc Serv, Health, Leisure Ent, Non-cyc Serv, Person Care

Transport, storage and comm. 6 7% Telecomm, Transport

Trade, hotels and restaurants 6 4%Cyc Cons, Food & Drug, Gen Retail, House Goods, Non-cyc Cons

Electricity, gas and water 4 3% Oil & Gas

Agri, Forestry and Fishing 3 1% Food Prod

Construction 2 8% Const & Build

100 100%

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The South African Economy Presented by: Dawie Roodt 14 September 2006