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Ben Smit 6 November 2002

Prospects for the World & SA economies. BER presentation to the. Parliamentary Committee on Trade & Industry. Ben Smit 6 November 2002. Outline. Global economic outlook Domestic economic prospects Manufacturing sector survey. Global Economic Outlook. Global economic outlook.

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Ben Smit 6 November 2002

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  1. Prospects for the World & SA economies BER presentation to the Parliamentary Committee on Trade & Industry Ben Smit 6 November 2002

  2. Outline • Global economic outlook • Domestic economic prospects • Manufacturing sector survey

  3. Global Economic Outlook

  4. Global economic outlook • Initially unexpectedly strong recovery to 2002 and 9/11 slowdown • Industrial recovery has stalled • US consumer confidence declines again

  5. Recovery in the US industrial sector has stalled… Sept 2002 PMI / ISM Oct 2001

  6. US consumer confidence weaker … Sept 2002 Michigansurvey

  7. World economic outlook: the growth numbers (JP Morgan)

  8. Domestic Economic Prospects

  9. 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

  10. 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))

  11. FNB/BER Consumer Confidence Index • Consumer sentiment slightly weaker in 2002Q3 • Still holding up relatively well

  12. Purchasing Managers Index October 2002

  13. South Africa’s inflation trend

  14. Current SA conditions:R/$ exchange rate

  15. Outlook: Inflation • 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

  16. Outlook: Economic growth • Stable growth since 1994 • Export growth essential • Upswing form 1999 to 2004/5 (?) • Employment growth essential for domestic response Forecast

  17. Outlook: the numbers

  18. Manufacturing Survey

  19. 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

  20. Manufacturing TotalBusiness Confidence Index

  21. Domestic sales volumes Expected

  22. Domestic sales volumes(BER survey: 02Q3 compared to 01Q3)

  23. Export sales volumes Expected

  24. Export sales volumes(BER survey: 02Q3 compared to 01Q3)

  25. Current stocks of finished goods

  26. Production volumes Expected

  27. Number of factory workers Expected

  28. Number of factory workers(BER survey: 02Q3 compared to 01Q3)

  29. Fixed Investment Expected

  30. Real fixed investment: 2002Q3(machinery & equipment: 12 month outlook)

  31. Western Cape Expected

  32. Eastern Cape Expected

  33. BUREAU FOR ECONOMIC RESEARCH Economic Information that works for You www.ber.sun.ac.za E-mail: hhman@ber.sun.ac.za

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