2. SA’s Macroeconomic Situation: - Mole Heap or Volcano? Presented by: Dawie Roodt 22 June 2006

3. Mole Heap

4. GDP

6. Percentage of World GDP ‘04 Source: UNAIDS

7. GDP Source: UN

8. Countries Compared to Provinces Source: UN

9. State Finances

11. Inflation

13. Conclusion  Solid GDP growth  Sustainable state debt  Benign inflation outlook: CPIX within target for 32 months  Strong consumer confidence  Strong business confidence

14. Volcano

15. Exchange rates Rand

16. Rand Valuation Gold $800 Rubicon Stock exchange crash ANC, Reds fall Election Exchange controls Asian crises Wakefordgate Rus, Zim, Arg Fin Rand NOFP + NOFP -

17. Private Sector Credit Extension

18. Disposable income of households Source: SARB

19. Household debt to disposable income Source: SARB

20. Savings to disposable income of households Source: SARB

21. Debt Servicing Cost

22. Interest rates

24. Commodity Prices

26. Balance of Payments

28. AIDS Source: UNAIDS

29. Conclusions  Currency exposed to global volatility  Alarming increase in PSCE  Stellar household debt/disposable income  Lack of ‘savings culture’ by households  Unexpected interest rate movements (on household budgets)  Commodity prices – effect on businesses and inflation outlook  Large current account deficit  Labour productivity  Effects of illnesses (AIDS, etc.) on workforce  Transparency of Monetary Policy Authorities – CPIX targets  2010 and beyond…?

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

31. Asset Allocation Reason Equities ( )Demand/Rand/International BondsInflation/Supply CashShort Interest rates PropertyProperty Cycle – Heavy Overweight – Overweight – Neutral – Underweight – Heavy Underweight

32. Local Equities, 2005 Economic SectorAllJSE Sector Agri, Forestry and Fishing Food Prod Mining and Quarrying Mining, Platinum, Gold, Coal Manufacturing Auto, Basic Ind, Beverages, Chem, Elect, IT Hard, Pharm & Bio, Steel & Other Electricity, gas and water Oil & Gas Construction Const & Build Trade, hotels and restaurants Cyc Cons, Food & Drug, Gen Retail, House Goods, Non- cyc Cons Transport, storage and comm. Telecomm, Transport Finance, prop and bus. serv Banks, Insurance, Life Ass, Media & Pht, IT, Property, Support Serv Personal Service Cyc Serv, Health, Leisure Ent, Non-cyc Serv, Person Care

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