1. Political-Economy Trends and the Car Industry CAR Conference 2011

2. SA Economics SA economy tripped twice since 1994 – in both cases because of global forces (1998 & 2009). Growth restored after 2009 recession: From -1.7% in 2009 to 2.7% in 2010 to 3.4% in ’11 ?? Current consensus: – Rising to 4.4% in 2013 ???? Average from 1995 to 2010 (16 yrs): 3,3%. Average 16 years before 1993: 1,55%. “Muddle thru” economy: 3,25%.

3. The Muddle Through Economy Pushing SA growth down: – Global environment. – Domestically: political confusion; strikes; inequality. – Huge social and human deficits; crime, health, education. – Tensions of Transition: mining & agriculture. Pushing SA growth up: – Investment: from 4% in 2000 to 6,5% in 2007 to 8,4% in the current cycle to 2013. – Building blocks of the 3Ms. (“Swing to the Left”). – Reasonable productivity growth. – SA’s increasing relations with BRICs. – Strong private sector institutions (compare Russia). Thus 3.25%.

4. Population Growth 1980s2,5%. (5,8) 19962,0%. 20101,06%. (2,38) 20140,9%. Total population now 50,6 million. 1,6%

5. More work, more unemployment People Working in SA 15 – 64 age group Unemploy- ment Rate Unemployed Number 19959,5 mil39%17,7%1,9 mil 200813,8 mil45%21,9%3,9 mil 201113,1 mil40.5%25.7%4,5 mil

6. Remedies for Unemployment Higher economic growth: – Commodity economy; need diversification. – New Growth Path: Promise: 5 mio in 10 yrs. Pre-condition for success…..? – What can happen anyway: 3,0 million jobs. Potpourri of measures: – wage subsidy (R5 bil) & Jobs Fund (R9 bil). – Social grant system: 3,5% of GDP. Public Works Programme, incl CWP & “TfF”: – 4,5 mio “job opportunities” to 2014; 4 mths & 6 mths. – 625 000 in first year. Deregulated labour market (no chance).

7. Inequality Gini Co-Efficient (100 = worst) Brazil57 Russia39.9 India36.8 China46.9 South Africa57.8

8. Moderation Wins Out (or Some Critical U-turns) “Swing to the left” post-Polokwane. 4 Labour Bills on inter alia labour broking. NHI proposals: – From ideology to greater efficiency. Green Paper on Land Reform: – From ideology to burocracy. Bill on Protection of Information. Reaction against Malema and ANCYL. Enquiry into the Arms Deal…?

9. Moderation Wins Out Why is this? – Open society (forces and counter-forces; checks & balances). – Open economy. We speak and act our fears, not rational analysis; debate of hatred & resentment.

10. Living with Ambiguity

12. Getting Richer 19 yrs -12% 17 yrs +28% 25 lost years

13. What Is Possible in SA (Black Swans Permitting!) Economic growth and demography combine to give SA a unique opportunity. For the low point in 1993 to 2010 – 17 yrs 28%. Just keep on doing it: – @ 3,25% p.a. & 11,5 years, incomes rise 28%. – @ 2,55% p.a. & 17 yrs, incomes rise 28%.