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Kgotso Radira

Kgotso Radira. Who do we blame??. 2. Conflicting answers from economists??. 3. 4. Global economic recovery is underway, but is SA’s consumer on that path…. The consumer benefits from the rand…. 6. …..rand exchange rate…. 7. …on a trade weighted basis. Index. % y/y. Euro 34.8%

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Kgotso Radira

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  1. Kgotso Radira

  2. Who do we blame?? 2

  3. Conflicting answers from economists?? 3

  4. 4

  5. Global economic recovery is underway, but is SA’s consumer on that path…..

  6. The consumer benefits from the rand….. 6

  7. …..rand exchange rate….. 7

  8. …on a trade weighted basis... Index % y/y Euro 34.8% USD 14.88% GBP 10.71% JPY 10.12% 8 Source: Bloomberg

  9. Some of the reasons for the rand’s strength 9

  10. …Real Interest rates are a key driver of the rand.. % % 10

  11. …SA’s sovereign risk has improved also influencing the rand supported by euro debt crisis.. bp R/$ 11

  12. …a similar story…. bp R/$ 12

  13. …inflows into equities .... 13 Source: I-Net

  14. ….and into SA bonds…. 14 Source: I-Net

  15. … relatively high interest rates and negative real interest rates in the US, pushed the rand dramatically stronger....

  16. …Real rates are important ... % Index 16 Source: I-Net, Investec

  17. ….and commodities

  18. …. is the rand really important in driving growth

  19. ….this graph shows that the rand moves with global growth

  20. ….our growth is driven by global demand not the rand Index %

  21. Domestic Economy

  22. ..the financial position of the consumer…… 22

  23. …inflation continues to moderate..… 23 Source: Stats SA, Investec Economics

  24. …a closer look at inflation.… 24 Source: Stats SA, Investec Economics

  25. …demand led inflation is contained… 25 Source: Stats SA, Investec Economics

  26. …administered prices are a major concern, making policy implementation difficult..… 26 Source: Stats SA, Investec Economics

  27. …The outlook for inflation is positive and supportive of consumption… R/$ Target range (3-6%) Source: Stats SA, Investec Economics

  28. …Inflation and interest rate forecasts • Should the SARB cut interest rates? • Do we really need it? • Is it going to help? • What about the pensioners? • Why so late? • If we cut now when do we start hiking?? • At what speed?? • House view?

  29. .. A cut wont help the interest rates much, it will be temporary… 29

  30. 30

  31. …the consumer…. 31

  32. The latest NCR report… 32 Source: NCR

  33. Deteriorating credit records… 33 Source: NCR

  34. ..this does not bode well for credit demand… 34 Source: NCR

  35. ..there are some promising signs… 35 Source: NCR

  36. ….but lets not get ahead of ourselves… 36 Source: NCR

  37. ..as the economy shed 871 000 jobs in 2009…. ‘000 37 Source: StatsSA

  38. … 171000 in Q1.10 and 61 000 in Q2.10 …. ‘000 38 Source: StatsSA

  39. Confidence is weak Consumer Confidence Index 39 Source: Ber

  40. Household savings rate % savings to disposable incomes 40 Source: SARB

  41. Household debt to income % 41 Source: SARB

  42. ..once of the key drivers of this debts was… % y/y ABSA House Prices 42 Source: SARB

  43. Household debt 43 Source: FNB property

  44. Household mortgage debt 44 Source: SARB

  45. Household debt 45 Source: SARB

  46. Consumer Vulnerability Index Q2.10 46 Source: Unisa

  47. Reasons for vulnerability 47 Source: Unisa

  48. ..lending standards are loosening 48 Source: Ernest & Young

  49. …yet credit demand is muted …. Source: SARB

  50. …mortgage demand remains weak as prices are fairly elevated …. Source: SARB

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