Download pptx - Storybook 01: South Africa’s Economic Output STANLIB Economics

Storybook 01:South Africa’s Economic Output

STANLIB Economics

Taxes etc10.1%

Trans/Comm8.2%Personal services

5.3%

Government14.9%

Financial19.3%

Agriculture2.3%

Mining8.3%

Manufacturing11.1%

Electricity2.5%

Construction3.6%

Retail14.3%

Breakdown of SA GDP by sector (2012)

The industrial base of SA has been under pressure for many years. The services sector has out-performed and represents around 70% of the economy.

Gauteng34.5%

Limpopo7.1%

Mpumalanga7.0%

Western Cape14.2%

Eastern Cape7.5%

Northern Cape2.2%

Free State5.3%

Kwa-Zulu Natal15.7%

North West6.5%

Breakdown of SA GDP by province (2011)

Economic activity remains concentrated in Johannesburg, Cape Town and Durban. Together, these three provinces represent almost 70% of the economy.

-7-6-5-4-3-2-1012345678

00 01 02 03 04 05 06 07 08 09 10 11 12 13

%q/q s.a.a.r

SA real GDP growth

SA economic growth has slowed noticeably in recent quarters due to a combination of weak global growth, higher domestic inflation and a moderation in fiscal stimulus

-3

-2

-1

0

1

2

3

4

5

6

7

8

00 01 02 03 04 05 06 07 08 09 10 11 12 13

%q/q s.a.a.r, 4-quarter moving average

SA real GDP growth year-on-yearSA GDP growth has slowed to an average of around 2.0% to 2.5% after a reasonable economic recovery in 2010 and 2011. Ideally, SA should look to achieve a sustainable growth rate of above 4%

SA GDP index

2007

2008

2009

2010

2011

2012

2013

104

106

108

110

112

114

116

118

120

122

Index 2006 = 100, constant prices

SA Economy is the largest it has ever been in both nominal and real terms. Although SA GDP has recovered from the 2009 recession, the growth rate is now slowing and employment remains below the pre-crisis level.

%q/q, annualisedPrimaryAgricultureMiningSecondaryManufacturingElectricityConstructionTertiaryTrade, hotelsTrans & CommFinanceGovernment

GDP (real)

GDP real growth per economic sector

Q1

-4.7-5.9

13.12.12.0

2.33.85.83.4

4.8

2011

Q2

-9.2-2.1

-4.30.40.2

5.14.13.45.1

1.9

Q3

-5.8-17.4

-0.3-3.00.1

5.82.15.54.2

1.9

Q4

-3.7-1.4

4.50.60.7

5.02.72.74.4

3.3

2012

Q1

4.8-15.1

6.4-0.85.1

3.22.44.41.8

2.5

Q2

9.330.9

-0.8-4.33.4

2.72.22.12.5

3.4

Q3

7.4-12.7

1.21.63.3

1.71.11.82.7

1.2

Q4

10.0-9.3

5.0-2.20.2

1.51.92.92.6

2.1

2013

Q1

-4.914.6

-7.9-3.00.9

1.92.23.31.9

0.9

South Africa’s growth rates slowed sharply in Q1 2013, hurt by a decline in manufacturing activity. Manufacturing activity should improve somewhat in Q2 2013

90100110120130140150160170180190200210220230240250

00 01 02 03 04 05 06 07 08 09 10 11 12 13

Index

Construction

Finance

Transport/Communication Retail

Manufacturing

Mining

Agriculture

Best performing industry sectors in SA

Construction has been the best performing sector over the past 10 years, boosted by the World Cup. Building and investment activity has since moderated significantly. Mining activity is essentially unchanged over the past 15 years, which is dismal. They services economy has shown steady growth

SA manufacturing and mining activity vs retail activity

2030405060708090100110120130140150160170180

02 03 04 05 06 07 08 09 10 11 12 13

Index

SA retail activity

SA manufacturing activity

SA mining activity

SA gold production

SA economic recovery has been consumption based rather than production based. SA Gold output has been in structural decline for many years

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

1965196619671968196919701971197219731974197519761977197819791980198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013

% of total

SA manufacturing production as % of GDP

South Africa’s manufacturing sector has been in structural decline for the past 20 years

-15

-10

-5

0

5

10

15

20

25

00 01 02 03 04 05 06 07 08 09 10 11 12 13


SA agricultural output

South Africa’s agricultural output is seasonal in nature, but has essentially trended sideways for more than 10 years, despite the need for more food production.

-3

0

3

6

9

12

15

18

00 01 02 03 04 05 06 07 08 09 10 11 12 13


SA construction output

South Africa’s construction activity slowed sharply in 2011, off a relatively high base. The industry has become somewhat more optimistic about a possible improvement in business conditions in recent quarters, but infrastructural activity needs to improve.

-2

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13


SA finance and business services output

The financial and business services sector is the largest component of the private sector, but has been losing momentum recently.

-16

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

00 01 02 03 04 05 06 07 08 09 10 11 12 13


SA manufacturing output

South Africa’s manufacturing sector had a dismal start to 2013, partly due to the timing of public holidays. Overall, manufacturing activity is still not back to pre-crisis levels.

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13


SA mining output

Mining output remains extremely volatile, impacted by numerous work stoppages or disruptions. The sector is a very large employer.

-4

-2

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13


SA retail and wholesale trade output

Consumer activity is slowly losing momentum, after a good recovery in 2010 and 2011. The slowdown is driven by a fall-off in household income growth.

-24-22-20-18-16-14-12-10

-8-6-4-202468

1012141618

00 01 02 03 04 05 06 07 08 09 10 11 12 13


SA growth in net exports

South Africa’s net exports are expected to improve over the coming quarters, mainly due to a moderation in import growth. Recent rand weakness should restrict import volumes, but also boost export volumes somewhat.

100

150

200

250

300

350

400

450

500

550

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Index, 1960 = 100, GDP at constant prices

SA GDP growth vs population growth

Population

GDP, real

South Africa’s economic growth in real terms, has outperformed the growth in the population, especially since 1994. Unfortunately, despite this out-performance, South Africa’s unemployment rate remains extremely high.

-5

-4

-3

-2

-1

0

1

2

3

4

5

1970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012

%y/y, real

South Africa annual growth in GDP per person

South Africa’s GDP per capita has improved meaningfully in the past 15 years. Unfortunately the income disparity remains extremely high by global standards.

20000

22000

24000

26000

28000

30000

32000

34000

36000

38000

40000

1970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012

Rand

South Africa GDP per person

South Africa’s income per capita has pushed higher in the past decade, but South Africa remains a middle income country by global standards

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

% of world GDP, nominal, Dollars

South Africa share of world GDPAlthough South Africa is a member of the G20 and BRICS, the economy represents well less than 1% of the world economy. This percentage has not changed significantly in the past 30 years

4.75.5

3.3

2.21.4

3.6

0

1

2

3

4

5

6

1950s

1960s

1970s

1980s

1990s

2000s

Annual average %

SA average GDP growth per decadeAfter growing rapidly in the 1950s and 1960s, South Africa’s growth rate stalled in the late 1970s and most of the 1980s, hurt by escalating political turmoil. The growth rate pick-up in the 2000s, but has lacked momentum in recent years

-3

-2

-1

0

1

2

3

4

5

6

198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014

%y/y

SA GDP annual growth rate

South Africa is forecast to grow by 2.2% in 2013, rising to around 3% in 2014. The expected pickup in growth is highly dependent on increased infrastructural spending as well as an improvement in the world economy

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0

PolandEgypt

SASingapore

BrazilKorea

ArgentinaRussiaTaiwanMexico

IsraelTurkey

ColombiaThailand

ChileMalaysia

IndiaPeru

PhilippinesIndonesia

NigeriaGhanaChina

2013 estimate, % change

Growth comparisons between emerging markets

South Africa is considered a low growth economy by emerging market standards. China still leads the pack followed by some of the African economies such as Ghana and Nigeria