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TIPS DEVELOPMENT DIALOGUE SEMINAR South Africa and the Credit Crunch

TIPS DEVELOPMENT DIALOGUE SEMINAR South Africa and the Credit Crunch. Ben Smit Bureau for Economic Research University of Stellenbosch 15 May 2009. Outline. SA already in cyclical slowdown when crisis struck Financial indicators Real indicators Overall expected impact.

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TIPS DEVELOPMENT DIALOGUE SEMINAR South Africa and the Credit Crunch

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  1. TIPS DEVELOPMENT DIALOGUE SEMINARSouth Africa and the Credit Crunch Ben Smit Bureau for Economic Research University of Stellenbosch 15 May 2009

  2. Outline • SA already in cyclical slowdown when crisis struck • Financial indicators • Real indicators • Overall expected impact

  3. SA cyclical slowdown: GDP growth rate

  4. SA cyclical slowdown: RMB/BER BCI • Business confidence declined from 33 in 08Q4 to 27 in 09Q1 • Manufacturing 31  16 • Building 42 33 • New vehicles 0 5 • Retail 49 52 • Wholesale 44 31 2009Q1

  5. Financial impact: Portfolio capital flows Oct ‘08

  6. Financial impact: Exchange rates Oct ‘08

  7. Financial impact: JSE share prices

  8. Financial impact: Share prices: Global vs SA

  9. Liquidity provided by central banks (2007 – 2008)

  10. Real sector: Exports decline sharply Source of basic data: Customs & Excise

  11. Real sector:Manufacturing: Investec PMI vs Prod Vol

  12. Real Sector: Manufacturing PMI: SA vs Global Expansion Contraction

  13. Expected Real sector:BER Manufacturing Survey: Export volumes changes -54

  14. Expected Real sector:BER manufacturing survey:Domestic sales volume changes -65

  15. Expected Real sector:BER manufacturing survey:Production volume changes -63

  16. Expected Real sectorBER manufacturing survey:Investment changes -23

  17. Real sector:BER manufacturing survey:Expected total fixed investment in 12 months time -8

  18. Real sector:BER Surveys:Number of people employed -26 -44 -50

  19. Real sector:BER manufacturing survey:Numbers employed vs hours worked -43 -67

  20. Monetary policy response

  21. Fiscal Policy response Budget more expansive than expected, unlikely to prevent sharp growth slowdown Budget may benefit SA focused construction companies, non-durable retailers (social grant increases, 45% of personal tax relief for people with taxable income below R150k p.a.) Extension of child support grant to 15 – research being done of feasibility of further extension to 18 years of ago Massive public sector investment (R787 over MTEF) key growth support, but also risks (offshore funding constrained in current environment) – Acsa already hinted may spend less

  22. Overall SA impact of the global crisis/recession in 2009

  23. Bureau for Economic ResearchEconomic information that works for you Website: www.ber.sun.ac.za E-mail: hhman@sun.ac.za Tel No: 021-887 2810

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