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MTBPS: Right mix, right time. Goolam Ballim Financial Markets Economist. Economics Division. Presentation outline. Timing. Policy mix. GDP, annual percent change. Excluding China & India, Dev. country GDP is likely to be below 2.5% in 2002. Developing countries. World. South Africa.

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Economics Division


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    1. MTBPS: Right mix, right time Goolam Ballim Financial Markets Economist Economics Division

    2. Presentation outline • Timing • Policy mix

    3. GDP, annual percent change Excluding China & India, Dev. country GDP is likely to be below 2.5% in 2002 Developing countries World South Africa USA 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Synchronised slowdown

    4. Room for fiscal stimulus General government fiscal balance, % of GDP Advanced economies* United States Developing countries South Africa 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 * United States, European Union & Japan

    5. % % South Africa USA Developing countries - right scale Advanced economies* 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 * United States, European Union & Japan Global disinflation

    6. Global monetary easing Central bank rates, % per annum 11 Sept South Africa United States United Kingdom EMU Japan 1999 2000 2001

    7. Policy mix

    8. Policy mix • Major drivers of growth: 1) private sector & government capital spending;

    9. Capital formation Net capital formation by organisation 1991 to 2000 Rand millions, nominal values

    10. Real gross fixed capital formation Quarter-on-quarter percentage changeSeasonally adjusted at annual rate Private sector Total 1996 1997 1998 1999 2000 2001

    11. Policy mix • Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates;

    12. SARB to lower rates further • SA likely to sustain disinflationary trend Percentage change year on year • Supported by: • 1. Slow growth in nominal labour costs, due to moderate wage increases and brisk productivity growth • 2. Continued liberalisation of SA economy • 3. Excess capacity over aggregate demand Prime lending rate CPIX 3-6% inflation target 1998 2000 2001 2002 1999

    13. Policy mix • Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates;3) declining tax rates;

    14. Tax burden General government tax revenue, (% of GDP) • Easing tax burden over the coming years, particularly for individuals

    15. Policy mix • Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates;3) declining tax rates;4) consistent export drive and export diversification;

    16. GDP & GDE Quarterly change, seasonally adjusted and annualised 1997 1998 1999 2000 2001

    17. SA’s declining dependence on commodities amid increased exports Resources and net gold exports as a percentage of total exports

    18. Policy mix • Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates - long- and short-term rates;3) declining tax rates;4) consistent export drive and export diversification;5) macroeconomic stabilisation and policy credibility.

    19. Policy mix • Major drivers of growth: 1) private sector & government capital spending;2) declining interest rates - long- and short-term rates;3) declining tax rates;4) consistent export drive and export diversification;5) macroeconomic stabilisation and policy credibility. • Low dependency on FDI reduces the probability of severe economic slowdown.

    20. FDI Stocks $ billion

    21. The end gballim@mail.sbic.co.za www.ed.standardbank.co.za Economics Division