1 REPUBLIC OF SOUTH AFRICA Investor Presentation

Transcript:1 REPUBLIC OF SOUTH AFRICA Investor Presentation:
1 REPUBLIC OF SOUTH AFRICA Investor Presentation Presenter: Lungisa Fuzile | Director General, National Treasury | November 2011 2 Key highlights Economy is recovering from Q2 slowdown, supported by: Favourable market backdrop for Emerging Markets Broadening in domestic demand Steadily improving investment prospects Accommodative monetary policy and counter-cyclical fiscal policy Fiscal finances on a sound footing Need for employment creation balanced with consolidation in expenditure Redirecting expenditure from current to infrastructure Debt and debt service ratios remain relatively low Debt sustainability a priority Borrowing requirement geared toward new growth path objectives External vulnerability reduced Current account deficit adequately financed Sustainable long-term policy solutions to limit current account funding risks Banking sector systemically sound 3 1. South Africa Macro Backdrop 4 South Africa impacted by global developments Global growth forecasts revised down from 4.4% to 4.0% Growth slowing in advanced economies High debt levels and borrowing costs High unemployment and weak housing markets Banking sector problems Brazil, China and India subject to inflationary and overheating pressures Forecast for South Africa growth to remain steady through 2013 IMF growth projections Source: SA National Treasury 5 Rebalancing of world demand Structural shift in world demand underway as economic power shifts to Emerging Market economies Emerging Markets share in South Africa’s export basket is rising: Share of exports to advanced economies declined to 51% in 2011 (64% in 2007) Exports to developing Asia increased to 27% in 2011 (15% in 2007) Africa absorbed 17% of SA exports over the past year Impact of slower growth in developed world on SA exports partially offset by stronger growth in Emerging Markets Emerging Markets share of SA exports Source: World Bank 1 1. GIIPS: Greece, Ireland, Italy, Portugal and Spain Source: The Department of Trade and Industry Emerging market household’s final consumption expenditure as % of world expenditure 6 2. South Africa Economic Performance 7 The domestic economic outlook is positive but downside risks remain GDP recovery expected over medium term, underpinned by: Accommodative fiscal and monetary policies Public sector capital formation Improving private sector confidence Inflation anchored within target band in the medium and longer term Emerging Markets trade partner growth leading exports higher GDP growth revised down amid elevated global risks Slower developed market external demand growth to be countered by recovering domestic and EM demand momentum Macroeconomic growth forecasts, 2010 - 2014 Source: SA National Treasury Source: SA National Treasury Strong demand from global