1. PORTFOLIO AND SELECT COMMITTEES ON FINANCE
August 2007
Portfolio August 2007

2. RECENT INTERNATIONAL ECONOMIC DEVELOPMENTS
Portfolio August 2007

3. Global economic growth remains relatively robust and the outlook continues to be favourable.
Portfolio August 2007

4. The monetary policy stance has generally become conservative…
Portfolio August 2007

5. The monetary policy stance has generally become conservative…
Portfolio August 2007

6. …which has helped to contain inflation expectations.
Portfolio August 2007

7. Inflation trends in the SADC countries remain mixed.
Portfolio August 2007

8. RECENT DOMESTIC ECONOMIC DEVELOPMENTS
Portfolio August 2007

9. The South African economy continued to grow in the first quarter of 2007, though at a slower pace...
Portfolio August 2007

10. ...mainly due to a decline in the real value added by the primary sector.
Portfolio August 2007

11. Although still exceeding the rate of growth in gross domestic product, the rate of growth in real gross domestic expenditure slowed considerably in the first quarter of 2007.
Portfolio August 2007

12. Growth in real final consumption expenditure by households moderated...
Portfolio August 2007

13. …alongside a slightly stronger increase in real disposable income of households…
Portfolio August 2007

14. …while household debt as well as household debt service cost as percentage of household disposable income continued their upward momentum.
Portfolio August 2007

15. By contrast, real final consumption expenditure by general government picked up strongly…
Portfolio August 2007

16. …along with a brisk increase in real gross fixed capital formation.
Portfolio August 2007

17. The national saving ratio increased marginally.
Portfolio August 2007

18. Manufacturing conditions remained in firm territory compared with the doldrums of early 2006.
Portfolio August 2007

19. Consumer confidence remains strong.
Portfolio August 2007

20. Business confidence has remained at relatively high levels for an unprecedented nine quarters...
Portfolio August 2007

21. The composite leading business cycle indicator moderated in the second half of 2006, but recently resumed its upward trend...
Portfolio August 2007

22. Consistent and robust growth in the South African economy has spurred on growth in employment.
Portfolio August 2007

23. Nominal remuneration per worker increased significantly in the year to the fourth quarter of 2006 before moderating in the following quarter.
Portfolio August 2007

24. Strong growth in employment undermined growth in productivity in the first quarter of 2007.
Portfolio August 2007

25. Slow growth in average nominal remuneration per worker was reflected in a modest increase in nominal unit labour cost during the first quarter of 2007.
Portfolio August 2007

26. Production price inflation reached a recent high in May 2007 before inching lower in June…
Portfolio August 2007

27. …while CPIX inflation breached the upper limit of the inflation target range for the third consecutive month in June 2007.
Portfolio August 2007

28. The current-account deficit narrowed during the first quarter of 2007.
Portfolio August 2007

29. The financial account of the balance of payments remained in surplus in the first quarter of 2007 following record inflows for the 2006 calendar year.
Portfolio August 2007

30. Gross gold and foreign exchange reserves rose further during the second quarter of 2007.
Portfolio August 2007

31. The exchange rate of the rand recovered during the second quarter of 2007 following a decline in the first quarter of 2007.
Portfolio August 2007

32. Growth in M3 continued at an exceptionally strong pace in the second quarter of 2007, bolstered by positive wealth effects and robust economic activity.
Portfolio August 2007

33. Growth in banks’ total loans and advances maintained a firm pace in the second quarter of 2007 despite securitisation transactions during this period.
Portfolio August 2007

34. Money-market rates continued their upward trend, tracing the change in the repurchase rate during the second quarter of 2007.
Portfolio August 2007

35. From late February 2007, the yield on long-term government bonds increased significantly...
Portfolio August 2007

36. ...and the yield curve moved higher.
Portfolio August 2007

37. Inflation expectations rose with the release of worse-than-anticipated inflation data and the high price of oil.
Portfolio August 2007

38. Trading activity in the secondary share market reached new highs...
Portfolio August 2007

39. ...as share prices continued to register record levels.
Portfolio August 2007

40. Although decelerating, twelve-month growth in house prices remained strong.
Portfolio August 2007

41. Government finances continued to be supportive of a disciplined monetary policy environment.
Portfolio August 2007

42. Portfolio August 2007