Exhibit 99.G
Quarterly Bulletin June 2019 South African Reserve Bank
Quarterly Bulletin June 2019 No. 292
© South African Reserve Bank All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without fully acknowledging the Quarterly Bulletin of the South African Reserve Bank as the source. The contents of this publication are intended for general information only and are not intended to serve as financial or other advice. While every precaution is taken to ensure the accuracy of information, the South African Reserve Bank shall not be liable to any person for inaccurate information or opinions contained in this publication. Enquiries relating to this Bulletin should be addressed to: Head: Economic Research and Statistics Department South African Reserve Bank P O Box 427 Pretoria 0001 Tel. +27 12 313 3668/3676 http://www.resbank.co.za ISSN 0038-2620 Android IOS Windows Produced by Publishing Section Quarterly Bulletin June 2019
Contents Quarterly Economic Review Introduction ............................................................................................................................... International economic developments ....................................................................................... Domestic economic developments ........................................................................................... Domestic output ............................................................................................................... Real gross domestic expenditure ...................................................................................... Gross nominal saving ........................................................................................................ Employment ...................................................................................................................... Labour cost and productivity ............................................................................................ Prices ................................................................................................................................ External economic accounts ..................................................................................................... Current account ................................................................................................................ Financial account .............................................................................................................. Foreign-owned assets in South Africa ............................................................................... South African-owned assets abroad ................................................................................. Foreign debt...................................................................................................................... International investment position ....................................................................................... International reserves and liquidity .................................................................................... Exchange rates ................................................................................................................. Turnover in the South African foreign exchange market..................................................... Monetary developments, interest rates and financial markets ................................................... Money supply.................................................................................................................... Credit extension ................................................................................................................ Interest rates and yields .................................................................................................... Money market ................................................................................................................... Bond market ..................................................................................................................... Share market..................................................................................................................... Market for exchange-traded derivatives ............................................................................ Real estate market ............................................................................................................ Non-bank financial intermediaries ..................................................................................... Public finance............................................................................................................................ Non-financial public sector borrowing requirement ........................................................... Budget comparable analysis of national government finance ............................................ 1 4 7 7 15 22 23 28 30 36 36 43 44 46 46 47 48 49 51 52 52 54 57 61 62 64 66 67 68 70 70 73 Boxes Box 1 Explaining the revision to nominal gross domestic product ............................................. Box 2 The characteristics of interest payments in South Africa’s balance of payments ............. Box 3 Observations on the evolution of South Africa’s fiscal position ........................................ Box 4 National government exposure to contingent liabilities .................................................... 12 40 71 79 Note on the flow of funds in South Africa’s national financial account for the year 2018 ...... 83 Abbreviations ........................................................................................................................... 98 Statistical tables Contents ..................................................................................................................................... S–0 Statistical tables .......................................................................................................................... S–2 Key information ....................................................................................................................... S–148 Quarterly Bulletin June 2019
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Quarterly Economic Review Introduction Global economic growth accelerated marginally to 3.3% in the first quarter of 2019 following a subdued second half of 2018. The quickening in output growth was fairly broad-based among the advanced economies, and was led by the United States (US). Real economic activity also increased at a faster pace in some major emerging market economies, such as China and Turkey, in the first quarter of 2019, while contracting in others. However, world trade volumes decreased in the opening quarter of 2019 as the notable decline in the export volumes of emerging markets reflected the impact of ongoing international trade tensions. Consumer price inflation in the major advanced economies remained broadly below central bank targets in the first quarter of 2019, despite tightening labour markets, while inflationary pressures generally eased in emerging market economies. The international prices of agricultural commodities as well as metals and minerals increased marginally in the first quarter of 2019, while energy prices decreased further. Although the price of Brent crude oil declined on a quarter-to-quarter average basis in the first quarter of 2019, it increased from below US$50 per barrel at the end of December 2018 to around US$74 per barrel by mid-May 2019. Oil prices subsequently declined significantly to around US$62 per barrel in early June on concerns that US–China trade tensions would weigh on demand. In South Africa, the first quarter of 2019 was characterised by severe electricity-supply disruptions, continued weak business confidence and caution ahead of the national elections in May. Real gross domestic product (GDP) contracted sharply by an annualised 3.2% in the first quarter of 2019 – the largest decrease since the first quarter of 2009 – but remained unchanged when measured over four quarters. The contraction was broad-based with real output decreasing in the primary, secondary and tertiary sectors, and in seven of the ten subsectors. The real gross value added (GVA) by the primary sector contracted for a fifth successive quarter in the first quarter of 2019, as real output receded sharply in both the agricultural and mining sectors. A further decline in the wine grape harvest and the postponement of the citrus fruit harvest to the second quarter of 2019 largely contributed to the lower agricultural output. The domestic maize harvest is also expected to be much lower than last year’s record harvest, but should be sufficient to cover domestic consumption. The decrease in the real output of the mining sector was fairly broad-based among the different mineral groups and was exacerbated by Stage 4 electricity load-shedding in February and March, planned maintenance and stocktaking at platinum mines, and the prolonged strike at a large gold mine. The real output of the secondary sector also contracted sharply in the first quarter of 2019, aggravated by the electricity-supply disruptions. The real GVA by the manufacturing as well as the electricity, gas and water supply sectors reverted from expansions to contractions, while construction activity decreased further in the first quarter of 2019. The real GVA by the tertiary sector switched from an expansion in the fourth quarter of 2018 to a contraction in the first quarter of 2019. The decrease in the real output of the commerce as well as the transport, storage and communication sectors reflected generally weak consumer demand and lower export and import volumes. The real GVA by the finance sector advanced at a slower pace, while that by the general government services sector reverted to an increase following a marginal decrease in the fourth quarter of 2018. In contrast to the contraction in real GDP, real gross domestic expenditure (GDE) increased by 4.5% in the first quarter of 2019 following a sharp contraction in the previous quarter. The reversal in real GDE reflected a notably slower pace of de-accumulation in inventories alongside a slight acceleration in final consumption expenditure by general government. By contrast, final consumption expenditure by households reverted from an increase to a decrease and real gross fixed capital formation contracted further. Real net exports detracted significantly from real GDP growth in the first quarter of 2019 as export volumes declined much more than import volumes. 1 Quarterly Bulletin June 2019
The contraction in real household consumption expenditure in the first quarter of 2019 resulted largely from notable declines in spending on durable and semi-durable goods. In addition, growth in real spending on non-durable goods moderated while that on services accelerated somewhat. The level of real expenditure by households was only 0.4% higher in the first quarter of 2019 than in the corresponding period of 2018, reflecting weak demand as growth in the real disposable income of households was weighed down by lacklustre employment growth, an increased tax burden and slower wage growth. However, households’ net wealth increased in the first quarter of 2019 as the increase in assets outpaced that in liabilities. The faster growth in the financial assets of households was underpinned by gains in equity portfolios as the FTSE/ JSE All-Share Price Index increased by 7.1% in the first quarter of 2019 – its best first-quarter performance since 2007 – following losses in the preceding two quarters. This was partly offset by slower growth in the non-financial assets of households due to a further slowdown in nominal house price growth. Real gross fixed capital formation decreased for a fifth consecutive quarter in the first quarter of 2019. Real fixed capital outlays by private business enterprises contracted sharply, consistent with the protracted period of low business confidence and subdued economic activity. By contrast, capital spending by public corporations and general government increased in the first quarter of 2019 following several consecutive quarters of contraction. Total household-surveyed employment decreased in the first quarter of 2019, weighed down by the sharp contraction in real GDP. The decline was most pronounced in the formal non-agricultural sector of the economy. The increase in the number of unemployed South Africans lifted the official unemployment rate to 27.6% in the first quarter of 2019, while the seasonally adjusted unemployment rate decreased to 27.2%. The number of discouraged work seekers increased by a notable 7.5% year on year to a record high of 3.0 million in the first quarter of 2019, as the prolonged period of weak economic growth made employment opportunities scarcer. Growth in nominal remuneration per worker in the formal non-agricultural sector of the economy slowed in the fourth quarter of 2018 as wage growth moderated in both the private and public sectors. On an annual average basis, growth in nominal remuneration per worker moderated from 6.4% in 2017 to a record low (since the inception of the data in 1971) of 4.7% in 2018. The slowdown in nominal wage growth resulted in a moderation in formal non-agricultural nominal unit labour cost growth in the fourth quarter of 2018. For 2018 as a whole, growth in nominal unit labour cost slowed to 4.4% – its slowest pace since 2007 – indicative of the lack of wage pressure in the domestic economy. Domestic inflationary pressures increased gradually in the first five months of 2019 in the wake of higher international crude oil prices and the depreciation in the exchange value of the rand. Most measures of producer price inflation have accelerated thus far in 2019, largely reflecting higher energy and food prices. Headline consumer price inflation also accelerated, from a recent low of 4.0% in January 2019 to 4.5% in May, but remained within the inflation target range for 26 consecutive months. Despite the gradual acceleration in producer food price inflation, consumer food price inflation remained muted up to April 2019 before accelerating slightly in May. Core inflation remained unchanged at 4.4% in the five months up to March 2019 before slowing to 4.1% in both April and May, reflecting an environment of weak domestic demand where margins are tight and firms are constrained to fully pass on cost increases to consumers. South Africa’s trade surplus with the rest of the world narrowed from the fourth quarter of 2018 to the first quarter of 2019 as the value of net gold and merchandise exports decreased more than that of merchandise imports. The value of mining, manufacturing and agricultural exports all declined notably, driven largely by lower volumes, which were adversely affected by the electricity-supply disruptions and labour strikes in the mining sector. In addition to the smaller trade surplus, the shortfall on the services, income and current transfer account widened slightly in the first quarter of 2019 as the services and current transfer deficits widened marginally, while the income deficit remained broadly unchanged. Accordingly, the deficit on the current account of the balance of payments widened from 2.2% of GDP in the fourth quarter of 2018 to 2.9% in the first quarter of 2019. 2 Quarterly Bulletin June 2019
The net inflow of capital on the financial account of the balance of payments increased in the first quarter of 2019. On a net basis, portfolio investment and reserve assets recorded inflows, while direct investment, financial derivatives and other investment registered outflows. South Africa’s positive net international investment position decreased from the end of September 2018 to the end of December as the value of foreign assets decreased and that of foreign liabilities increased marginally. The decrease in the value of foreign assets mainly reflected the effect of the sharp decline in global equity prices on portfolio investment assets. South Africa’s external debt increased from the end of September 2018 to the end of December as the value of foreign currency-denominated external debt increased, mainly due to short-term foreign loans to the domestic banking sector. The nominal effective exchange rate (NEER) of the rand decreased further in the first quarter of 2019 amid ongoing month-to-month volatility and despite a notable increase in January 2019. The strong increase in January followed the release of the trade balance for November 2018 that reverted to a surplus, as well as further monetary policy easing by the People’s Bank of China and another interest rate pause by the US Federal Reserve, all of which provided support to emerging market assets. The exchange value of the rand then depreciated in February and March following the release of the 2019 Budget Review, concerns about the potential impact of the electricity outages on economic growth, the risk of successive fuel price increases to inflation, and uncertainty ahead of the national elections in May. The NEER increased again in April 2019 following South Africa’s retention of a sovereign investment-grade rating, but decreased in the aftermath of the national elections due to policy uncertainty and the larger-than-expected contraction in domestic real GDP in the first quarter of 2019. In early 2019 South African bond yields broadly tracked the movements in the exchange rate of the rand before continuing lower up to the end of May, in step with lower international bond yields. Year-on-year growth in the broadly defined money supply (M3) rebounded in the first quarter of 2019, contrary to the slower growth in nominal GDP. Growth in the deposit holdings of the corporate sector accelerated markedly, in particular that of financial companies, amid risk aversion in the run-up to the national elections. By contrast, growth in the deposit holdings of households bottomed out at fairly subdued rates. Growth in bank credit extended to the domestic private sector accelerated in the first four months of 2019 as the gradual acceleration in loans and advances to households continued and credit extension to the corporate sector quickened. Although growth in most of the credit categories to both households and companies accelerated over the period, growth in mortgage advances remained subdued. National government’s cash book deficit increased by R21.0 billion from fiscal 2017/18 to fiscal 2018/19, and was R42.0 billion more than the original budget estimate. The deterioration in national government finances in fiscal 2018/19 resulted from further revenue shortfalls, while expenditure was slightly below the original estimate. The revenue shortfall could largely be ascribed to weaker-than-expected domestic economic activity and higher tax refunds, in particular of value-added tax. Despite the larger cash book deficit of national government, the non-financial public sector borrowing requirement was marginally lower in fiscal 2018/19 than in the previous fiscal year, as the larger cash deficits of national government and of non-financial public enterprises and corporations were more than offset by cash surpluses of all other tiers of general government. 3 Quarterly Bulletin June 2019
International economic developments Global economic growth gained some momentum in the first quarter of 2019 following a subdued second half of 2018. Real global output growth accelerated from an annualised rate of 3.0% in the fourth quarter of 2018 to 3.3% in the first quarter of 2019. The acceleration in output growth was fairly broad-based among the advanced economies, while real economic activity also improved in some major emerging markets such as China and Turkey. Real global output growth and contributions from advanced and emerging market economies Percentage points Percentage change from quarter to quarter 5 5 4 4 3 3 2 2 1 1 0 0 2014 2015 2016 2017 2018 2019 Seasonally adjusted annualised rates Sources: Bloomberg, Haver Analytics, IMF, JPMorgan and SARB The United States (US) led the economic recovery in the advanced economies, with growth in real gross domestic product (GDP) accelerating from 2.2% in the fourth quarter of 2018 to 3.1% in the first quarter of 2019. The acceleration was largely driven by net exports and personal consumption expenditure, which together contributed 1.9 percentage growth, while inventory accumulation added 0.7 percentage points. points to real GDP Real output growth in selected advanced economies Quarter-to-quarter percentage change at seasonally adjusted annualised rates 2017 2018 2019 Country/region Q2 Q3 Q4 Year* Q1 Q2 Q3 Q4 Year* Q1 United States................. Japan ............................ Euro area....................... United Kingdom ............ Canada ......................... Australia ........................ New Zealand ................. Advanced economies... 3.0 2.2 2.7 1.0 4.4 3.3 3.5 2.8 2.8 2.4 2.7 2.1 1.3 2.7 3.4 2.9 2.3 1.3 2.8 1.6 1.7 2.4 3.5 2.2 2.2 1.9 2.4 1.8 3.5 2.5 2.8 2.3 2.2 -0.4 1.6 0.2 1.5 3.9 2.1 1.9 4.2 2.3 1.6 1.6 2.5 3.6 3.8 2.7 3.4 -2.6 0.5 2.8 2.1 1.2 1.5 1.6 2.2 1.8 1.0 0.9 0.3 0.9 2.5 1.7 2.9 0.8 1.9 1.4 2.2 2.7 2.8 2.3 3.1 2.2 1.6 2.0 0.4 1.6 2.2 2.2 * Percentage change over one year Sources: Bloomberg, Haver Analytics, IMF and SARB 4 Quarterly Bulletin June 2019 Advanced economies Emerging market economies Global growth (right-hand scale)
Real GDP growth in the euro area rebounded from a weak 1.0% in the fourth quarter of 2018 to 1.6% in the first quarter of 2019 as economic conditions in Italy and Germany improved. The Italian economy expanded by 0.5% following a technical recession in the second half of 2018. Germany also posted a solid gain as real GDP expanded by 1.7% in the first quarter of 2019, from a near standstill of 0.1% at the end of 2018. In general, the euro area benefited from robust consumer spending and increased construction activity amid mild weather conditions. In the United Kingdom, real economic growth more than doubled from 0.9% in the fourth quarter of 2018 to 2.0% in the first quarter of 2019, mainly due to resilient household consumption expenditure and a build-up of inventories in preparation for a possible disorderly Brexit. Japanese output growth unexpectedly accelerated from 1.8% in the fourth quarter 2018 to 2.2% in the first quarter of 2019, as imports declined and inventories increased. Real economic growth in emerging markets remained unchanged at 4.2% in the first quarter of 2019, with growth decelerating in emerging Asia and output contracting in Latin America. This was offset by improved economic conditions in emerging Europe, where real output reverted from a contraction in the fourth quarter of 2018 to an expansion in the first quarter of 2019. In emerging Asia, China’s real output growth surprised on the upside at 6.9% in the first quarter of 2019 due to a recovery in the finance and construction sectors. By contrast, real GDP growth in India slowed to 4.1% in the first quarter of 2019 due to weaker consumer demand and fixed investment. Real output growth in selected emerging market economies Quarter-to-quarter percentage change at seasonally adjusted annualised rates 2017 2018 2019 Country/region Q2 Q3 Q4 Year* Q1 Q2 Q3 Q4 Year* Q1 China........................... India ............................ Indonesia..................... Emerging Asia ............ Russia ......................... Turkey ......................... Poland......................... Emerging Europe........ Brazil ........................... Mexico ........................ Argentina ..................... Latin America ............. 7.0 6.5 5.2 6.7 2.6 7.7 3.6 4.4 1.2 1.2 4.6 2.0 6.9 9.5 5.2 7.3 0.8 6.5 4.9 3.4 0.5 -1.3 6.8 1.6 6.5 8.6 5.3 6.7 -2.5 10.2 6.1 2.7 1.0 3.7 3.6 2.3 6.8 7.2 5.1 6.6 1.6 7.4 4.9 4.0 1.1 2.1 2.7 1.9 6.9 7.6 4.7 6.8 6.7 4.2 5.7 5.5 2.1 5.4 -0.9 2.9 6.5 6.0 5.8 6.1 3.3 -0.4 4.9 2.7 0.0 -1.5 -17.5 -1.3 6.1 6.1 4.9 5.8 1.3 -5.9 6.1 0.5 2.0 2.7 -1.1 1.6 6.1 6.9 5.3 6.2 0.4 -9.4 2.0 -1.6 0.4 0.1 -5.0 0.7 6.6 6.8 5.2 6.4 2.3 2.6 5.1 3.2 1.1 2.0 -2.5 1.7 6.9 4.1 4.3 5.8 -2.8 5.2 6.1 1.4 -0.6 -0.7 -0.9 -0.8 Emerging economies.. 5.6 5.8 5.4 4.9 6.0 4.5 4.4 4.2 4.6 4.2 * Percentage change over one year Sources: Bloomberg, Haver Analytics, IMF, JPMorgan and SARB In Latin America, an expansion of 0.7% in real output in the fourth quarter of 2018 switched to a contraction of 0.8% in the first quarter of 2019. Regional growth was constrained by weak economic activity in Argentina, Brazil, Mexico and Venezuela. Argentina’s economy remains in recession as output declined by 0.9% in the first quarter of 2019. Real GDP in Brazil contracted by 0.6% as investor confidence waned, while the contraction of 0.7% in Mexico resulted largely from a decline in services activity and continued weak oil output. 5 Quarterly Bulletin June 2019
The economic recovery in emerging Europe was largely driven by a sharp improvement in Turkey’s real GDP, which expanded by 5.2% in the first quarter of 2019 after a severe technical recession in the second half of 2018 (-5.9% in the third quarter and -9.4% in the fourth quarter). The rebound in Turkey’s output growth resulted from an increase in government final consumption expenditure and a decline in imports, which was partly offset by lower exports and reduced gross fixed capital formation. Real GDP growth in Poland also accelerated from 2.0% in the fourth quarter of 2018 to 6.1% in the first quarter of 2019. This was in sharp contrast to the contraction in economic activity in Russia of 2.8% as consumer demand weakened following an increase in the value-added tax rate. Headline consumer price inflation in the major advanced economies generally remained below central banks’ 2.0% inflation targets, despite tightening labour markets. In the US, growth in the personal consumption expenditure deflator (the US Federal Reserve’s preferred inflation measure) slowed to 1.4% in the first quarter of 2019, partly due to temporary factors. Inflationary pressures in emerging market economies generally eased in the first quarter of 2019. World trade volumes (using world exports as a proxy) declined further by 1.0% in March 2019 (in three-months-to-three-months terms), in part due to ongoing trade tensions. Export volumes in emerging markets fell by 4.6% over this period, mainly due to lower exports from Latin America. Exports from advanced economies increased by 1.8% in March 2019. The international prices of agricultural commodities as well as metals and minerals rose modestly in the first quarter of 2019, while energy prices declined further. The price of Brent crude oil increased from below US$50 per barrel at the end of December 2018 to around US$74 per barrel by mid-May 2019. The increase in oil prices was mainly driven by production cuts in oil-exporting countries and US sanctions on Iranian and Venezuelan oil exports. However, oil prices declined significantly to around US$62 per barrel in early June on concerns that US–China trade tensions would weigh on demand. Rising US oil inventories also contributed to renewed downward pressure on oil prices. International commodity prices in US dollars Index: 2010 = 100 150 130 110 90 70 50 30 2014 2015 2016 2017 2018 2019 Sources: World Bank and SARB The international prices of agricultural products, in US dollar terms, increased slightly by 0.9% in the first quarter of 2019 due to increases in maize, soya bean and sorghum prices. Metals and minerals prices rose by 1.7% over the same period, owing to higher iron ore, nickel and tin prices. 6 Quarterly Bulletin June 2019 Agriculture Metals and minerals Energy
Domestic economic developments Domestic output1 Following two successive quarters of expansion, real gross domestic product (GDP) contracted at an annualised rate of 3.2% in the first quarter of 2019 – the largest contraction since the first quarter of 2009 (when it contracted by 6.1%), at the height of the global financial crisis. The decrease was exacerbated by severe electricity-supply disruptions and was broad-based, with real output shrinking in the primary, secondary and tertiary sectors, and in seven of the ten subsectors. However, measured over four quarters, real GDP remained unchanged in the first quarter of 2019. 1The quarter-to-quarter growth rates referred to in this section are based on seasonally adjusted data and are annualised. Real gross domestic product Quarter-to-quarter percentage change at seasonally adjusted annualised rates 2018 2019 Sector Q1 Q2 Q3 Q4 Year* Q1 Primary sector ............................................................. -16.4 -33.7 -9.1 -6.2 -8.4 0.4 -7.3 -42.3 8.1 1.3 1.4 -0.1 -4.0 13.7 -8.9 4.9 7.5 2.9 -1.1 7.9 -3.8 3.0 4.5 1.7 -2.5 -4.8 -1.7 0.5 1.0 1.3 -11.4 -13.2 -10.8 -7.4 -8.8 -0.7 Agriculture ............................................................... Mining...................................................................... Secondary sector ........................................................ Manufacturing.......................................................... Tertiary sector.............................................................. Non-primary sector** ................................................... Non-agricultural sector*** ............................................ Total ............................................................................ -1.1 -1.8 -2.7 0.2 0.8 -0.5 3.3 2.2 2.6 2.0 1.5 1.4 1.1 0.9 0.8 -2.2 -2.9 -3.2 * Percentage change over one year ** The non-primary sector is total GVA excluding agriculture and mining *** The non-agricultural sector is total GVA excluding agriculture Source: Stats SA The real output of the non-primary sector contracted by 2.2% in the first quarter of 2019, following an increase of 2.0% in the fourth quarter of 2018. Real gross domestic product Percentage change 6 5 4 3 2 1 0 -1 -2 -3 -4 2014 2015 2016 2017 2018 2019 Source: Stats SA 7 Quarterly Bulletin June 2019 Quarter to quarter* Over four quarters * Seasonally adjusted annualised rates
The real gross value added (GVA) by the primary sector contracted further by a notable 11.4% in the first quarter of 2019 – the fifth contraction in as many quarters. Real output receded sharply in both the agricultural and mining sectors. Real value added by the primary sector Index: first quarter of 2014 = 100 130 120 110 100 90 80 2014 2015 2016 2017 2018 2019 Source: Stats SA The real output of the agricultural sector declined by 13.2% in the first quarter of 2019, subtracting 0.3 percentage points from real GDP growth. A further decline in the wine grape harvest and the postponement of the citrus fruit harvest to the second quarter of 2019 largely contributed to the decrease in the real GVA by the agricultural sector. The expected commercial maize crop of 10.9 million tons for the 2018/19 production season is 12.9% less than the final 2017/18 crop, but ought to be sufficient to cover annual domestic consumption of about 10.8 million tons. South Africa is also likely to remain a net exporter of maize in the 2019/20 market year, given the surplus from the previous harvest. The final 2018 wheat crop increased by 21.7% to almost 1.9 million tons compared to the 2017 crop, but South Africa still remains a net importer of wheat. Commercial maize crop estimates Crop (million tons) Area planted (million hectares) 2017/18: final estimate ............................................................. 12.51 2.32 2018/19: fourth production forecast ........................................ 10.90 2.30 Source: Crop Estimates Committee of the Department of Agriculture, Forestry and Fisheries The real GVA by the mining sector contracted further by 10.8% in the first quarter of 2019, subtracting 0.8 percentage points from overall real GDP growth. Production shrank in 8 of the 12 mineral groups, most notably diamonds, iron ore, platinum group metals (PGMs) and coal. By contrast, the production of gold, copper, other metallic minerals and other non-metallic minerals increased. Mining output was adversely affected by Stage 4 electricity load-shedding in February and March, planned maintenance and stocktaking at platinum mines, and the prolonged strike at a large gold mine. The real GVA by the mining sector was 4.6% lower in the first quarter of 2019 than a year earlier. The real GVA by the secondary sector reverted from an expansion of 3.0% in the fourth quarter of 2018 to a contraction of 7.4% in the first quarter of 2019. The real output of the manufacturing as well as the electricity, gas and water supply sectors switched from an expansion to a contraction over the same period, while activity in the construction sector contracted further in the first quarter of 2019. 8 Quarterly Bulletin June 2019 Mining Total Agriculture Seasonally adjusted
Real gross value added by the mining sector Percentage change from quarter to quarter 30 20 10 0 -10 -20 -30 Physical volume of mining production: selected subsectors Index: first quarter of 2014 = 100 160 140 Platinum group metals 120 100 80 60 2014 Source: Stats SA 2015 2016 2017 2018 2019 Contributions to growth in real gross domestic product Primary sector Agriculture, forestry and fishing Mining and quarrying Secondary sector Manufacturing Electricity, gas and water Construction Tertiary sector Wholesale and retail trade, catering and accommodation Transport, storage and communication Finance, insurance, real estate and business services General government services Personal services Net taxes and subsidies -1.5 -0.5 0.0 0.5 1.5 -1.0 1.0 Percentage points Source: Stats SA 9 Quarterly Bulletin June 2019 -0.1 -1.1 0.2 -0.3 -0.3 -0.8 0.5 -1.3 0.6 -1.1 0.0 -0.1 0.0 -0.1 1.1 -0.4 -0.1 -0.5 0.7 -0.4 0.5 0.2 Fourth quarter 2018 -0.1 First quarter 2019 0.2 0.1 0.1 -0.2 -0.3 Diamonds Coal Iron ore Seasonally adjusted Seasonally adjusted annualised rates
The manufacturing sector’s real output decreased sharply in the first quarter of 2019, following fairly brisk increases in the preceding three quarters. The real GVA by the manufacturing sector contracted by 8.8% in the first quarter of 2019 and deducted 1.1 percentage points from overall GDP growth. Production volumes decreased the most in the subsectors supplying petroleum, chemical products, rubber and plastic products; motor vehicles, parts and accessories; wood and wood products, paper, publishing and printing; glass and non-metallic mineral products; as well as textiles, clothing, leather and footwear. Manufacturing production was adversely affected by frequent electricity-supply shortages, higher input prices – in particular fuel – and weak domestic demand. In addition, the demand for manufactured exports weakened as global manufacturing production slowed amid ongoing international trade tensions. The seasonally adjusted utilisation of production capacity in the manufacturing sector increased slightly from 81.4% in November 2018 to 81.7% in February 2019, while business confidence among manufacturers remained weak. Despite the contraction in the first quarter of 2019, the level of real manufacturing output was still 0.6% higher than in the corresponding period of 2018. Physical volume of manufacturing production Index: first quarter of 2014 = 100 110 105 100 95 Glass and non-metallic minerals 90 Textiles, clothing, leather and footwear 85 80 2014 2015 2016 2017 2018 2019 Source: Stats SA Real economic activity in the sector supplying electricity, gas and water shrank at an annualised rate of 6.9% in the first quarter of 2019, following a marginal increase of 0.2% in the fourth quarter of 2018. Both electricity production and consumption decreased notably, reflecting Eskom’s implementation of rotational load-shedding up to Stage 4 due to deficiencies at the Medupi and Kusile power plants, unplanned maintenance at aging coal-fired power plants, reduced electricity imports due to broken transmission lines from Cahora Bassa caused by Cyclone Idai, and shortfalls in water and diesel reserves. The real GVA by the construction sector maintained its downward trend and contracted further by 2.2% in the first quarter of 2019. Both non-residential building and civil construction activity decreased further alongside a slower pace of decline in residential building activity. Construction activity was hampered by the prolonged period of low business confidence and weak demand from the public sector in particular, given the constrained fiscal environment. The real GVA by the tertiary sector switched to a decrease of 0.7% in the first quarter of 2019, from an increase of 1.7% in the preceding quarter. This reflected a contraction in the real output of the commerce as well as the transport, storage and communication sectors, while growth moderated in the finance sector. The real GVA by the general government services sector increased slightly in the first quarter of 2019. 10 Quarterly Bulletin June 2019 Motor vehicles, parts and accessories, Petroleum, chemicals,and other transport equipment rubber and plastics Total Seasonally adjusted
Real value added by the tertiary sector Index: first quarter of 2014 = 100 112 110 Transport, storage and communication 108 Total 106 104 Wholesale and retail trade, catering and accommodation 102 100 98 2014 2015 2016 2017 2018 2019 Source: Stats SA The real output of the commerce sector contracted by a further 3.6% in the first quarter of 2019 after decreasing by 0.7% in the fourth quarter of 2018, subtracting 0.5 percentage points from overall GDP growth. Activity in all three subsectors, namely wholesale, retail and motor trade, contracted in the first quarter of 2019. Retail trade activity was weighed down by lower sales of textiles, clothing, footwear and leather goods; hardware, paint and glass; and in the ‘all other retailers’ category. Activity in the wholesale trade subsector was suppressed by weaker sales of food, beverages and tobacco; precious stones, jewellery and silverware; solid, liquid and gaseous fuels; and machinery, equipment and supplies. Subdued business and consumer confidence, weak consumer demand following slower wage growth, and recent fuel price increases constrained the real output of the commerce sector. The real GVA by the motor trade subsector also contracted in the first quarter of 2019, as new passenger vehicle sales decreased at a slower pace alongside a further decline in used vehicle sales. Vehicle exports also contracted in the first quarter of 2019. The real output of the transport, storage and communication sector decreased by 4.4% in the first quarter of 2019, following a fairly brisk increase of 7.7% in the fourth quarter of 2018. Weak growth in freight transportation mainly drove the decline in the output of the transport subsector, consistent with the decline in both import and export volumes. Both land and air passenger transport activity were also subdued in the first quarter of 2019. The real output of the finance, insurance, real estate and business services sector increased by only 1.1% in the first quarter of 2019, following an increase of 2.7% in the fourth quarter of 2018. The marginal expansion reflected increased activity in the financial intermediation, real estate and business services subsectors, while equity market activity contracted in the first quarter of 2019. The level of output of the finance, insurance, real estate and business services sector was 2.4% higher in the first quarter of 2019 than in the corresponding quarter of 2018. The real GVA by the general government services sector rose by 1.2% in the first quarter of 2019, reflecting a temporary election-related increase in the number of government employees. 11 Quarterly Bulletin June 2019 Finance, insurance, real estate and business services General government services Seasonally adjusted
7 2 12 Quarterly Bulletin June 2019 Box 1 Explaining the revision to nominal gross domestic product1, 2 In March 2019, Statistics South Africa (Stats SA) published revised gross domestic product (GDP) estimates according to the production approach for the period 2015 to the third quarter of 2018. This lowered the level of nominal GDP by R72 billion for the first three quarters of 2018 as well as the growth rates calculated over four quarters.3 On a quarterly basis, the impact on both the level and growth rates in the prior years was less pronounced. In addition, the effect of the revisions on annual nominal GDP from 2015 to 2017 in terms of both the levels and growth rates was fairly insignificant, as expected.4 This box addresses questions raised by the unexpected large downward revision to quarterly nominal GDP in 2018. Nominal gross domestic product at market prices Quarterly level Year-on-year growth R billionsPercentage change over four quarters 1 300 9 1 250 8 1 200 1 150 6 1 100 5 1 050 1 000 4 950 3 2015 2016 2017 2018 2015 2016 2017 2018 Annual level Annual growth R billionsPercentage change 5 000 10 4 500 8 6 4 000 4 3 500 3 000 0 2015 2016 2017 2018 2015 2016 2017 2018 BeforeAfterNew Source: Stats SA The estimates for the national accounts aggregates in South Africa are compiled by Stats SA according to the System of National Accounts (SNA)5 methodology. The estimates for GDP, both nominal and real, are derived from both the production6 and expenditure7 approaches at market prices within the framework of the 1 Stats SA compiles and publishes South Africa’s GDP estimates. For the methodology, see http://www.statssa.gov.za/publications/P0441/ P04413rdQuarter2014.pdf 2 Nominal GDP is the current value at market prices of all the final goods and services produced in an economy during a specific period, and it reflects changes in both volumes and prices. 3 See table KB605 on page S–114 of this Quarterly Bulletin. 4 See table KB601 on page S–110 and table KB605 on page S–114 of this Quarterly Bulletin. 5 The System of National Accounts 2008 (2008 SNA) provides the statistical framework for a comprehensive and consistent set of macroeconomic accounts. The 2008 SNA was developed by the United Nations, the European Commission, the Organisation for Economic Co-operation and Development, the International Monetary Fund and the World Bank Group. See https://unstats.un.org/unsd/ nationalaccount/docs/sna2008.pdf 6 The production (output) approach measures gross value added (GVA) as the value of output less intermediate consumption. GDP is measured as GVA plus taxes on products less subsidies on products. 7 The expenditure approach measures the final uses of the produced output as final consumption expenditure plus gross capital formation, plus exports less imports. 7.47.6 6.5 6.4 6.9 6.8 4.7
Output at basic Year intermediate GVA at net taxes on GDP at market 13 Quarterly Bulletin June 2019 supply and use tables.8 The annual GDP estimates are also calculated independently from the quarterly estimates within the supply and use framework. Revisions of estimated national accounts aggregates are essential to correct for additional source data, new methodologies and statistical errors. When revisions are made because of methodological improvements, it is quite important that these be explained, and their impact on the data clearly identified. Stats SA revises the national accounts statistics annually and at five-yearly intervals, with the latter being a more comprehensive benchmark. Annual GDP estimates are revised once a year and published in March of the following year. For quarterly GDP statistics, Stats SA uses short-term economic indicators, which are incomplete in terms of coverage, to derive trends for the estimation of quarterly nominal GDP. These short-term indicators are generally not as reliable and comprehensive as annual surveys. The revision in March 2019, for the three years from 2015 to 2017, incorporated revised estimates from one of Stats SA’s important economy-wide surveys known as the Annual Financial Statistics, and was complemented by other surveys. The revision also took into account the latest large sample surveys of the different industries within the systematic framework of the supply and use tables, which provided for comprehensive comparison and data confrontation. In the revision process, the annual gross value added (GVA) at basic prices9 of each industry is derived within the supply and use framework from both the production and expenditure approach. Output10 and intermediate consumption11 are estimated separately, with GVA at basic prices equal to output less intermediate consumption for each sub-industry.12 March 2019 revisions to annual nominal gross domestic product R billions Less:Equals:Less:Equals: prices consumption basic prices products prices 2015 Before ........................ 7924 4298 3626 426 4052 After ...........................7928430336254254050 Difference ...................45-1 -1 -2 2016 Before ........................ 8432 4551 3881 469 4350 After ...........................8464457238924674359 Difference ...................322111-2 9 2017 Before ........................ 9002* 4830* 4172 480 4652 After ...........................8965479241734804653 Difference ...................-37 -38 102 2018 New ........................... 9327* 4986* 4341 533 4874 * Estimates made by the SARB Components may not add up to totals due to rounding off Sources: Stats SA and SARB The 2015 to 2017 independent annual revisions of nominal GDP estimates led to the revision of all the quarterly estimates. The revisions of the 2017 estimates, in particular for the fourth quarter, also affected the revisions of the first three quarters of 2018. Quarterly estimates of nominal and real GVA and GDP are based on annual estimates. The objective is to preserve the movements in the short-term indicators within the constraints of the new annual estimates. The proportional Denton method13 is used to maintain the trends in the quarterly estimates of GDP and in the growth rates. The downward revision of quarterly nominal GVA and nominal GDP at market prices in the first three quarters of 2018 largely reflected revisions in the finance, real estate and business services; the trade, catering and accommodation; and the manufacturing sectors. 8 The supply and use tables provide a framework to verify the consistency of economic statistics obtained from different sources. See http://www.statssa.gov.za/?page_id=1854&PPN=P0441 9 GVA at basic prices is defined as output valued at basic prices less intermediate consumption valued at purchasers’ prices. 10 Output consists only of those goods and services that are produced within an establishment, and that are available for use outside the establishment and for own final use in the establishment. 11 Intermediate consumption is expenditure by enterprises on goods and services consumed as inputs in the production process. 12 See table KB601 on page S–110 and table KB642 on page S–135 of this Quarterly Bulletin. 13 The Denton method implicitly constructs a quarterly series of ratios between value added and the underlying indicators, calculated from the revised annual ratios between estimates of value added and the underlying indicators. The constraint is that quarterly ratios average those of annual ratios for the years that have a revised annual estimate of GDP.
2018 total GVA* in Q1 Q2 Q3 Total (per cent) Output at basic intermediate GVA at Year 14 Quarterly Bulletin June 2019 Change in nominal gross value added and gross domestic product in the first three quarters of 2018 R billions Contribution to 2017 Agriculture, forestry and fishing....................................2.61315 Mining and quarrying ...................................................8.2-1 022 Manufacturing .............................................................13.4-3 -3 -5 -11 Electricity, gas and water.............................................3.80001 Construction................................................................3.9-1 -1 -1 -3 Trade, catering and accommodation ...........................15.0-5 -5 -6 -16 Transport, storage and communication .......................9.8-2 -1 -3 -7 Finance, real estate and business services ..................-13 -10 -11 -33 Finance and insurance ............................................9.0-3 -6 -6 -15 Real estate and business services ..........................10.8-9 -4 -5 -18 General government services ......................................17.6-2 -1 -1 -4 Personal services ........................................................5.8000-1 Gross value added at basic prices ............................100.0-24 -20 -24 -68 Taxes less subsidies on products ................................-4 -1 0-5 Gross domestic product at market prices .................-28 -20 -24 -72 Level Before .........................................................................1 1841 2311 271 After ............................................................................1 1571 2111 246 * Contribution of each kind of economic activity in 2017 to nominal GVA Components may not add up to totals due to rounding off Source: Stats SA Double deflation and the derived deflator Less:Equals: prices consumption basic prices Economy as a whole Current prices (R billions) 2016Before ........................................................................843245513881 After ...........................................................................846445723892 Difference ...................................................................322111 Agriculture, forestry and fishing Current prices (R billions) 2016Before ........................................................................23714295 After ...........................................................................24014397 Difference ...................................................................312 Constant 2010 prices (R billions) 2016Before ........................................................................16910564 After ..........................................................................17010664 Difference ...................................................................110 Derived deflator (Index: 2010 = 100) 2016Before ........................................................................140.3135.7148.1 After ..........................................................................141.0135.1150.8 Difference ...................................................................0.7-0.6 2.7 Components may not add up to totals due to rounding off Source: Stats SA
2015 2016 2017 2018 2015 2016 2017 2018 Real gross domestic expenditure2 The contraction in real GDP in the first quarter of 2019 was in contrast to the notable increase in real gross domestic expenditure (GDE), and reflected the impact of the large negative contribution of real net exports. The reversal in real GDE from a contraction of 7.0% in the fourth quarter of 2018 to an expansion of 4.5% in the first quarter of 2019 reflected the slight acceleration in final consumption expenditure by general government alongside a slower pace of de-accumulation in inventories. By contrast, final consumption expenditure by households reverted from an increase to a decrease, while real gross fixed capital formation contracted further. Despite the quarterly volatility, the level of real GDE was 0.5% lower in the first quarter of 2019 compared to the corresponding period of 2018. 2The quarter-to-quarter growth rates referred to in this section are based on seasonally adjusted data and are annualised. 15 Quarterly Bulletin June 2019 Annual real GVA estimates (at constant 2010 prices) are derived from nominal values through double deflation.14 This method separately removes price changes from the nominal value of output and intermediate consumption. The derived deflator for GVA changes when the original unchanged price indices are used to deflate revised nominal levels of output and intermediate consumption by sub-industry. The change in the derived GDP deflator15 is not due to price changes but due to the application of double deflation16 to the revised nominal value of output and intermediate consumption, which changes the level of nominal GVA and GDP at market prices. Derived deflator* of gross domestic Growth in annual real gross domestic product at market prices product at market prices Index: 2010 = 100 Percentage change 165 2.0 160 155 1.5 150 145 1.0 140 135 0.5 130 125 0.0 BeforeAfterNew * The deflator is based on nominal seasonallySource: Stats SA adjusted annualised data compiled by the SARB Sources: Stats SA and SARB In the final instance, the revisions of nominal GVA and GDP are also reflected in the real variables which only show the changes in volumes. 14 Double deflation provides for separate deflation of both output and intermediate consumption of all sub-industries using suitable price indices. For Stat SA’s double-deflation methodology, see http://www.statssa.gov.za/publications/P0441/P04413rdQuarter2014.pdf 15 The derived GDP deflator is an implicit price index that measures inflation or deflation in an economy, and is calculated by dividing the nominal GVA by the real GVA or nominal GDP by the real GDP. 16 For an example of double deflation, see the table on the previous page. 1.4 1.31.3 0.8 1.2 0.6 0.4 Seasonally adjusted
Real gross domestic product, expenditure and components of final demand Percentage change from quarter to quarter 10 8 6 4 2 0 -2 -4 -6 -8 -10 oduct expenditure Index: first quarter of 2014 = 100 110 108 expenditure by households 106 104 Final consumption expenditure by 102 100 98 96 2014 2015 2016 2017 2018 2019 Sources: Stats SA and SARB Real gross domestic expenditure Quarter-to-quarter percentage change at seasonally adjusted annualised rates 2018 2019 Component Q1 Q2 Q3 Q4 Year1 Q1 Final consumption expenditure Households................................................................. General government.................................................... Gross fixed capital formation .......................................... Domestic final demand2 ................................................ Change in inventories (R billions)3 ................................... Residual4 ........................................................................ Gross domestic expenditure5 ........................................ 1.1 4.6 -9.3 -0.3 13.1 0.0 1.2 0.1 2.1 -3.8 -0.2 4.6 0.0 -1.4 0.6 0.4 -0.7 0.3 14.5 0.1 2.1 3.2 0.6 -2.5 1.6 -53.9 0.0 -7.0 1.8 1.9 -1.4 1.2 -5.4 0.0 1.0 -0.8 1.3 -4.5 -1.1 -11.6 0.1 4.5 1 2 3 4 5 Percentage change over one year Comprises final consumption expenditure by households and general government as well as gross fixed capital formation At constant 2010 prices The residual as a percentage of GDP Including the residual Sources: Stats SA and SARB Real GDE added 4.4 percentage points to real GDP growth in the first quarter of 2019, with the change in real inventories contributing 5.3 percentage points. By contrast, real net exports and gross fixed capital formation subtracted 7.5 and 0.9 percentage points respectively from real GDP growth in the first quarter of 2019. Real exports contracted by 7.4% (not annualised) in the first quarter of 2019 following an increase of 2.7% in the fourth quarter of 2018. The contraction was broad-based, as real exports of all three main goods categories as well as that of services decreased. 16 Quarterly Bulletin June 2019 Final consumption general government Gross fixed capital formation Seasonally adjusted Gross domestic pr Gross domestic Seasonally adjusted annualised rates
Contributions of expenditure components to growth in real gross domestic product Percentage points 2018 2019 Component Q1 Q2 Q3 Q4 Year Q1 Final consumption expenditure Households................................................................ General government................................................... Gross fixed capital formation ......................................... Change in inventories .................................................... Residual ........................................................................ Gross domestic expenditure ....................................... Net exports ................................................................... Gross domestic product .............................................. 0.7 0.9 -1.9 1.5 0.0 1.2 -3.9 -2.7 0.1 0.4 -0.8 -1.1 0.0 -1.4 0.9 -0.5 0.3 0.1 -0.1 1.3 0.5 2.1 0.5 2.6 2.0 0.1 -0.5 -8.7 -0.2 -7.3 8.7 1.4 1.1 0.4 -0.3 -0.3 0.1 1.0 -0.2 0.8 -0.5 0.3 -0.9 5.3 0.2 4.4 -7.5 -3.2 Components may not add up to totals due to rounding off Sources: Stats SA and SARB Real mining exports declined as the contraction in the export volumes of precious metals (including gold, PGMs and stones), and base metals and articles outweighed the higher export volumes of mineral products. Contractions in the export volumes of vehicles and transport equipment; machinery and equipment; and prepared foodstuffs, beverages and tobacco weighed on the export volumes of manufactured goods. Agricultural exports also decreased as the export volumes of vegetables receded markedly. Real exports and imports of goods and services Quarter-to-quarter percentage change* Q4 2018 and Q1 2019 Exports Imports Component Percentage of total** Percentage of total** Q4*** Q1*** Q4*** Q1*** Total ............................................................. 100 2.7 -7.4 100 -4.3 -1.2 Mining.......................................................... Of which: Mineral products.................................. Precious metals including gold, platinum group metals and stones ...... Base metals and articles ..................... 46.8 4.2 -9.9 20.5 -7.5 -1.1 18.9 3.4 6.2 15.0 -7.9 -1.6 16.4 11.6 9.4 -1.8 -29.1 -6.6 1.3 4.2 -12.2 -4.5 -7.8 2.6 Manufacturing ............................................. Of which: Vehicles and transport equipment ....... Machinery and electrical equipment .... Chemical products .............................. Prepared foodstuffs, beverages and tobacco ........................................ 32.7 3.0 -3.8 62.4 -3.0 -1.1 10.5 6.7 5.3 8.4 2.1 0.9 -6.3 -5.3 1.7 12.4 24.8 9.2 -1.4 -6.7 1.1 3.2 0.0 -5.6 3.6 2.3 -3.0 2.5 -1.0 -4.4 Agriculture ................................................... Of which: Vegetable products ............................. 5.7 0.2 -12.7 3.6 -5.7 -7.6 4.4 -2.5 -15.6 1.4 2.5 -12.6 Services ....................................................... 13.8 -1.5 -3.6 12.6 -4.9 0.8 * Based on seasonally adjusted and annualised data ** Expressed as a percentage of the total in 2018 *** Not annualised Components may not add up to totals due to rounding off and the exclusion of unclassified items Sources: SARS, Stats SA and SARB 17 Quarterly Bulletin June 2019
Real imports of goods and services declined further by 1.2% (not annualised) in the first quarter of 2019 as import volumes contracted in all of the major goods components, alongside an increase in the imports of services. Weaker domestic demand for mineral products and precious metals (including gold, PGMs and stones) weighed on total mining imports. Real manufactured imports were adversely affected by contractions in the import volumes of chemical products as well as prepared foodstuffs, beverages and tobacco. A notable decline in vegetable imports lowered agricultural import volumes. Contributions of real exports and imports, and net exports of goods and services to growth in real gross domestic product Percentage points Q4 of 2018 and Q1 of 2019 Exports Imports* Net exports Component Q4 Q1 Q4 Q1 Q4 Q1 Total ............................................................... 3.2 -9.0 -5.4 -1.5 8.7 -7.5 Mining............................................................ Of which: Mineral products.................................... Precious metals including gold, platinum group metals and stones......... Base metals and articles ....................... 2.4 -5.7 -2.0 -0.3 4.4 -5.4 0.8 1.4 -1.5 -0.3 2.3 1.7 1.9 -0.3 -6.2 -0.9 -0.2 -0.2 -0.1 0.1 2.1 0.0 -6.1 -1.0 Manufacturing ............................................... Of which: Vehicles and transport equipment ......... Machinery and electrical equipment ...... Chemical products ................................ Prepared foodstuffs, beverages and tobacco .......................................... 1.2 -1.5 -2.4 -0.9 3.6 -0.7 1.1 0.2 0.1 -0.9 -0.4 0.1 -0.2 -2.2 0.1 0.5 0.0 -0.7 1.3 2.3 -0.1 -1.4 -0.4 0.8 0.1 0.1 0.0 -0.1 0.1 0.0 Agriculture ..................................................... Of which: Vegetable products ............................... Services ......................................................... 0.0 -0.9 -0.3 -0.3 0.3 -0.6 -0.1 -0.3 -0.9 -0.6 0.0 -0.8 -0.2 0.1 -0.2 0.5 -0.7 -0.7 * A positive contribution by imports subtracts from growth and a negative contribution adds to growth Components may not add up to totals due to rounding off and the exclusion of unclassified items Sources: SARS, Stats SA and SARB Real net exports subtracted 7.5 percentage points from real GDP growth in the first quarter of 2019, mainly due to a 5.4 percentage point deduction by real net mining exports. In particular, the net export volumes of precious and base metals combined subtracted 7.1 percentage points, which was partly offset by a contribution of 1.7 percentage points from the net export volumes of mineral products. Real net manufactured and agricultural export volumes deducted 0.7 and 0.6 percentage points respectively from real GDP growth in the first quarter of 2019. Real final consumption expenditure by households contracted by 0.8% in the first quarter of 2019 following an increase of 3.2% in the fourth quarter of 2018. Real outlays on durable and semi-durable goods declined in the first quarter of 2019, while growth in real spending on non-durable goods moderated and that on services accelerated slightly. The level of real expenditure by households was 0.4% higher in the first quarter of 2019 than in the corresponding period of 2018. 18 Quarterly Bulletin June 2019
Real final consumption expenditure and disposable income of households, and consumer confidence Percentage change over four quarters Index 30 9 confidence (right-hand scale) 20 6 3 10 0 0 -3 -10 -6 -20 2014 2015 2016 2017 2018 2019 Sources: BER and Stats SA Subdued growth in household consumption expenditure was consistent with the decline in consumer confidence in the first quarter of 2019, as measured by the First National Bank/ Bureau for Economic Research (FNB/BER) Consumer Confidence Index. Consumers’ finances have been under pressure due to the prolonged period of weak economic activity, rising unemployment, an increased tax burden and successive fuel price increases. Growth in the real disposable income of households was weighed down by lacklustre employment growth and slower wage growth. Real expenditure on durable goods reverted from a notable increase of 7.7% in the fourth quarter of 2018 to a sharp contraction of 5.8% in the first quarter of 2019. Real spending on personal transport equipment, which accounts for the bulk of durable goods expenditure, declined notably. Real outlays on recreational and entertainment goods as well as other durable goods also decreased, while that on furniture and household appliances increased at a slower pace. Real spending on passenger vehicles may have been suppressed by constrained household budgets as well as uncertainty ahead of the May 2019 national elections. Real final consumption expenditure by households Quarter-to-quarter percentage change at seasonally adjusted annualised rates 2018 2019 Category Q1 Q2 Q3 Q4 Year* Q1 Durable goods............................................................... Semi-durable goods ...................................................... Non-durable goods ....................................................... Services ........................................................................ Total .............................................................................. 2.8 -13.1 0.6 4.8 1.1 -3.7 1.2 -1.8 2.4 0.1 -3.7 9.0 2.7 -2.0 0.6 7.7 8.7 3.0 1.1 3.2 4.5 3.0 0.8 1.9 1.8 -5.8 -10.5 0.2 1.7 -0.8 * Percentage change over one year Source: Stats SA 19 Quarterly Bulletin June 2019 Final consum Disposable in Consumer ption expenditure come
Real outlays on semi-durable goods declined sharply by 10.5% in the first quarter of 2019, following a solid increase of 8.7% in the final quarter of 2018. Spending on all semi-durable subcategories contracted, especially on clothing and footwear, which comprises about 60% of total semi-durable goods expenditure. Growth in expenditure on non-durable goods moderated from a rate of 3.0% in the fourth quarter of 2018 to only 0.2% in the first quarter of 2019. Outlays contracted in half of the subsectors, particularly in household consumer goods, petroleum products, and recreational and entertainment goods. Expenditure on food, beverages and tobacco increased at a somewhat slower pace, while that on medical and pharmaceutical products increased at a steady pace, partly offsetting the declines in the other categories. Growth in real household expenditure on services, which constitutes around 45% of total household consumption expenditure, accelerated to 1.7% in the first quarter of 2019, from 1.1% in the fourth quarter of 2018. Increased real outlays on transport and communication services; recreational, entertainment and educational services; and miscellaneous services outweighed reduced spending on household and medical services. The ratio of household debt to nominal disposable income inched lower to 72.5% in the first quarter of 2019, from 72.7% in the fourth quarter of 2018, as the quarter-to-quarter increase in nominal disposable income exceeded the increase in household debt. However, households’ cost of servicing debt as a percentage of nominal disposable income remained at 9.3% for a second successive quarter as lending rates remained unchanged. Faster growth in households’ financial assets in the first quarter of 2019 was underpinned by a gain in equity portfolios. This was partly offset by slower growth in the non-financial assets of households due to a further slowdown in nominal house price growth. Households’ net wealth increased in the first quarter of 2019 as the increase in total assets outpaced that in liabilities. Consistent with the increase in the net wealth of households and the sluggish growth in nominal disposable income, the ratio of net wealth to disposable income rose from 356.7% in the fourth quarter of 2018 to 365.8% in the first quarter of 2019. Household net wealth and debt as a ratio of disposable income Per cent 80 400 78 390 76 380 74 370 72 360 70 350 68 340 66 330 2014 2015 2016 2017 2018 2019 Seasonally adjusted Source: SARB Growth in the real final consumption expenditure by general government accelerated to 1.3% in the first quarter of 2019, from 0.6% in the fourth quarter of 2018. Real spending on both the compensation of employees and on non-wage goods and services increased. Spending on the compensation of employees was supported by temporary appointments by the Electoral 20 Quarterly Bulletin June 2019 Debt Net wealth (right-hand scale)
Commission of South Africa in preparation for the national elections, while increased expenditure on non-wage goods and services, albeit at a slower pace, showed government’s commitment to improve the quality of the education and health systems. However, government spending remains restricted by limited fiscal space and the high public sector wage bill. Measured over four quarters, growth in the real final consumption expenditure by general government decelerated to 1.0% in the first quarter of 2019, from 1.9% in the fourth quarter of 2018. Real final consumption expenditure by general government Percentage change 8 6 4 2 0 -2 -4 -6 -8 -10 2014 2015 2016 2017 2018 2019 Source: Stats SA The downward trend in fixed capital investment continued as real gross fixed capital formation decreased further by 4.5% in the first quarter of 2019 – the fifth consecutive quarterly decline. Real fixed capital outlays by private business enterprises declined notably in the first quarter of 2019, whereas that by public corporations and general government increased following several consecutive quarters of contraction. Real gross fixed capital formation Quarter-to-quarter percentage change at seasonally adjusted annualised rates 2018 2019 Sector Q1 Q2 Q3 Q4 Year* Q1 Private business enterprises ....................................... Public corporations.................................................... General government .................................................. Total .......................................................................... -6.7 -15.5 -14.1 -9.3 -1.3 -13.8 -4.3 -3.8 2.9 -7.9 -9.0 -0.7 -1.4 -5.6 -4.1 -2.5 2.1 -12.5 -4.4 -1.4 -9.8 16.6 1.6 -4.5 * Percentage change over one year Source: Stats SA Real gross fixed capital outlays by private business enterprises receded further by 9.8% in the first quarter of 2019, consistent with the protracted period of low business confidence and subdued economic activity. Private sector capital spending on transport equipment contracted alongside a slight increase in capital outlays on machinery and equipment. Furthermore, capital investments in independent power producer (IPP) projects decreased in the first quarter of 2019. However, following a long delay, nearly all of the 27 new IPP projects approved under Bid Window 4 had entered the construction phase, and an increase in capital expenditure by this sector is expected over the medium term. 21 Quarterly Bulletin June 2019 Quarter to quarter* Over four quarters * Seasonally adjusted annualised rates
Real gross fixed capital formation by private business enterprises and business confidence Percentage change over four quarters Index 8 55 6 50 4 45 2 0 40 -2 35 -4 30 -6 25 -8 2014 2015 2016 2017 2018 2019 Sources: BER and Stats SA Real gross fixed capital expenditure by public corporations increased notably by 16.6% in the first quarter of 2019 following four consecutive quarterly contractions. The improvement came from a low base alongside a strong investment drive by state-owned companies (SOCs), despite financial and governance challenges. Growth in real capital spending on machinery and equipment rebounded in the first quarter of 2019. Real capital expenditure by general government increased by 1.6% in the first quarter of 2019, following a decrease of 4.1% in the preceding quarter. A marked pickup in capital outlays by provincial and local government more than offset reduced capital expenditure by central government. Real inventory holdings declined by a further R11.6 billion (at 2010 prices) in the first quarter of 2019, following an annualised depletion of R53.9 billion in the fourth quarter of 2018 – the largest rundown since the fourth quarter of 2008. The decrease in inventories largely reflected inventory rundowns in the mining and transport sectors while inventory build-ups were reported in manufacturing, electricity and the trade sectors. Industrial and commercial inventories as a percentage of non-agricultural nominal GDP edged higher from 9.9% in the fourth quarter of 2018 to 10.4% in the first quarter of 2019. Gross nominal saving South Africa’s national saving rate improved from 14.0% in the fourth quarter of 2018 to 14.7% in the first quarter of 2019. Higher saving by incorporated business enterprises and by households outweighed larger dissaving by general government. The foreign financing ratio, which represents the shortfall in domestic saving to finance capital formation, increased to 16.5% in the first quarter of 2019, from 13.6% in the previous quarter. Gross saving by the corporate sector as a percentage of GDP increased from 13.3% in the fourth quarter of 2018 to 13.9% in the first quarter of 2019, as the decrease in corporate tax payments outweighed the decline in operating surpluses. 22 Quarterly Bulletin June 2019 Gr Bu oss fixed capital formation siness confidence (right-hand scale)
Gross saving as a percentage of gross domestic product Ratio in per cent at seasonally adjusted annualised rates 2018 2019 Sector Q1 Q2 Q3 Q4 Year Q1 Corporate...................................................................... General government ................................................... Household .................................................................. Total ........................................................................... 13.5 -0.5 1.3 14.3 11.8 0.9 1.6 14.3 13.5 -0.1 1.4 14.9 13.3 -0.4 1.2 14.0 13.0 0.0 1.4 14.4 13.9 -0.6 1.4 14.7 Source: SARB Gross dissaving by general government as a percentage of GDP increased to 0.6% in the first quarter of 2019, from 0.4% in the fourth quarter of 2018. The slow pace of increase in government revenue, particularly taxes on production and imports, together with an increase in government expenditure, exacerbated dissaving by general government. Gross saving by the household sector as a percentage of GDP rose marginally to 1.4% in the first quarter of 2019. The increase in nominal disposable income marginally outweighed the increase in nominal consumption expenditure in the first quarter of 2019. Both household income and expenditure were constrained by slower growth in the compensation of employees and increased tax payments. Employment3 The number of formally employed South Africans remained broadly unchanged in the fourth quarter of 2018, consistent with slower growth in domestic output. According to Statistics South Africa’s (Stats SA) Quarterly Employment Statistics (QES) survey, enterprise-surveyed formal non-agricultural employment increased by a mere 0.1% (0.5% seasonally adjusted and annualised) from the third to the fourth quarter of 2018. Only 13 500 formal jobs were added in the fourth quarter, keeping the number of formally employed people broadly unchanged at 10.1 million. On an annual average basis, total formal non-agricultural employment increased by 0.6% in 2018, following a contraction of 0.2% in 2017. Employment growth has slowed notably since 2011 and has fluctuated around zero in recent years, in line with the moderation in real GDP growth. 3Unless stated to the contrary, the QES data reported in this section are seasonally adjusted. Formal non-agricultural employment and real gross value added Percentage change over one year 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 Annual averages -1.0 2011 2012 2013 2014 2015 2016 2017 2018 Sources: Stats SA and SARB 23 Quarterly Bulletin June 2019 Employment Gross value added
Stats SA’s new annual sample, as drawn from the 2018 Business Sampling Frame, adjusted the level of formal non-agricultural employment upwards by about 283 000 in the second quarter of 2018.4 4The SARB statistically linked the QES data analysed in this section to adjust for the level shift. The increase in formal non-agricultural employment in the fourth quarter of 2018 resulted from an expansion in both private and public sector employment. Private sector employment increased at an annualised rate of 0.6%, as the services sectors of the economy created additional employment opportunities, while job shedding in the goods-producing sectors continued at a faster pace. On an annual average basis, private sector employment increased moderately for a fourth successive year in 2018. Formal non-agricultural employment Number (millions) 2.4 7.9 2.3 7.8 2.2 7.7 2.1 2.0 7.6 2011 2012 2013 2014 2015 2016 2017 2018 Sources: Stats SA and SARB Public sector employment increased marginally in the fourth quarter of 2018 following the loss of around 49 300 jobs in the preceding two quarters. Employment at local governments increased notably for a fifth successive quarter, supported by the Department of Public Works’ commitment to intensify the provision of work and training opportunities through the Expanded Public Works Programme. Employment also increased at a provincial level as well as in the public transport, storage and communication services sector in the fourth quarter of 2018, but decreased at national departments and other public sector enterprises. On an annual average basis, public sector employment increased by 0.4% in 2018 when excluding election-related outliers, following a contraction in 2017. Mining sector employment contracted further in the fourth quarter of 2018 as job shedding continued unabated in the gold-mining sector, while employment in the non-gold mining sector increased marginally. The gold-mining sector lost about 8 400 jobs in 2018 as a whole as labour paring continued at an accelerated pace. With the exception of 2017, mining sector employment has contracted every year since 2013. Renewed headwinds, such as above-inflation electricity price increases, the carbon tax on fuel from June 2019, electricity-supply constraints and moderate global economic growth continue to weigh on the sector’s ability to create meaningful employment. 24 Quarterly Bulletin June 2019 Public sector Public sector (adjusted for election-related outliers) Private sector (right-hand scale) Annual averages
Enterprise-surveyed formal non-agricultural employment* Change over one Change over four quarter: Q4 2018quarters to Q4 2018 Sector Total number Per cent annualised Number Number Per cent Total mining ................................................................ 452 000 -1 800 -1.6 -7 500 -1.6 Gold mining............................................................. 94 000 -2 900 -11.4 -11 800 -11.1 Other mining ........................................................... 358 000 1 100 1.2 4 300 1.2 Manufacturing ............................................................ 1 211 000 -7 500 -2.5 -9 600 -0.8 Construction............................................................... 627 000 -4 600 -2.9 -16 800 -2.6 Total goods-producing ............................................... 2 290 000 -13 900 -2.4 -34 000 -1.5 Trade, catering and accommodation services............. 2 225 000 -3 000 -0.5 37 000 1.7 Transport, storage and communication services......... 378 000 2 500 2.6 700 0.2 Finance, insurance, real estate and business services 2 350 000 24 100 4.2 60 200 2.6 Community, social and personal services ................... 635 000 1 600 1.0 10 500 1.7 Total services.............................................................. 5 588 000 25 200 1.8 108 400 2.0 Private sector ............................................................ 7 879 000 11 200 0.6 74 400 1.0 National departments ................................................. 462 000 -2 400 -2.0 -9 100 -1.9 Provinces ................................................................... 1 047 000 5 300 2.1 -3 300 -0.3 Local governments ..................................................... 334 000 4 600 5.6 15 300 4.8 Transport, storage and communication services ........ Other public sector enterprises, including electricity and IEC**.................................................................... Public sector ............................................................. 108 000 100 0.4 2 200 2.1 274 000 2 225 000 -5 400 2 200 -7.5 0.4 5 300 10 400 2.0 0.5 Grand total ................................................................ 10 104 000 13 500 0.5 84 800 0.8 *Seasonally adjusted. Components may not add up to totals due to rounding off. ** Electoral Commission of South Africa Sources: Stats SA and SARB Employment in the manufacturing sector decreased in the fourth quarter of 2018, fully reversing the previous quarter’s gains, while this sector’s real gross value added increased for a third successive quarter. The increased divergence between manufacturing sector employment and output reflects the increased substitution of labour for capital by manufacturers to maintain competitiveness. The Absa Manufacturing Survey by Stellenbosch University’s Bureau for Economic Research (BER) showed that manufacturing business confidence declined from 30 to 25 index points in the first quarter of 2019, remaining well below its long-term average of 43 index points (since 1994) and the neutral 50-point level. Respondents indicated that domestic sales volumes declined further in the first quarter of this year, along with a notable drop in export sales volumes. Renewed cost pressures, over and above the sustained weakness in domestic demand, and an unsupportive global economy does not augur well for employment growth in the manufacturing sector in the short run. 25 Quarterly Bulletin June 2019
Employment in the private goods-producing sectors Index: first quarter of 2011 = 100 110 105 100 95 90 85 2011 2012 2013 2014 2015 2016 2017 2018 Sources: Stats SA and SARB Employment in the construction sector decreased for a fifth successive quarter in the fourth quarter of 2018 in the wake of heightened uncertainty about future prospects for the sector, with a cumulative 27 600 jobs lost over this period. On an annual average basis, construction sector employment decreased further and at an accelerated pace in 2018, in line with a contraction in this sector’s real value added amid historically low confidence levels. The FNB/BER Civil Confidence Index fell to an all-time low of 10 index points in the first quarter of 2019 as business conditions continued to deteriorate. Respondents indicated that growth in construction activity slowed further, exacerbated by the constrained fiscus and poor financial position of SOCs, which necessitated spending cuts on infrastructure outlays. Similarly, the FNB/BER Building Confidence Index fell to an almost eight-year low of 25 index points in the first quarter of 2019, weighed down by the prolonged and broad-based decline in building activity. The BER noted that the lack of demand for new building work suggests continued weakness in the building sector in the near term. Furthermore, as a number of large construction companies applied for business rescue in recent months, employment prospects in the construction sector remain extremely bleak. Employment in the finance, insurance, real estate and business services sector – the largest employment provider in the private sector – increased notably for a fourth successive quarter in the fourth quarter of 2018 with a cumulative 60 200 jobs being created. However, employment in the trade, catering and accommodation services sector decreased marginally in the fourth quarter of 2018, but has increased on an annual average basis for eight successive years. The BER’s Retail Survey showed that business confidence among retailers fell from 33 to 24 index points in the first quarter of 2019 following a broad-based deterioration in trading conditions across the sector. Retailers are cautiously optimistic that conditions will improve slightly in the short term, despite renewed pressure on household income pointing to subdued growth in household consumption expenditure. This was echoed by the further retreat in the FNB/BER Consumer Confidence Index in the first quarter of 2019 from the highs recorded in the first half of 2018. 26 Quarterly Bulletin June 2019 Manufacturing Construction Mining Annual averages
Employment in the private services sectors Index: first quarter of 2011 = 100 115 110 105 100 95 2011 2012 2013 2014 2015 2016 2017 2018 Sources: Stats SA and SARB According to the Quarterly Labour Force Survey (QLFS) of Stats SA, the total number of people employed in South Africa decreased by 237 000 (1.4%) between the fourth quarter of 2018 and the first quarter of 2019, and by 86 000 (0.5%) from a year earlier, lowering total employment to approximately 16.3 million people. Employment losses occurred in both the formal non-agricultural sector and in agriculture in the year to the first quarter of 2019, while the informal sector and private households registered employment gains. Annual job losses were observed in the community and social services, construction, manufacturing and agricultural sectors. Conversely, annual employment gains occurred in the finance, trade, transport, mining and electricity sectors. The number of employees with contracts of a limited duration decreased the most in the year to the first quarter of 2019, followed by those with unspecified duration contracts and permanent contracts. Household-surveyed labour market statistics Thousands 2018 2019 Mar Jun Sep Dec Mar a. Total employment ......................................... b. Total unemployment (official definition) .......... c. Total economically active (= a + b)................ d. Total not economically active ........................ e. Total aged 15-64 years (= c + d) ................. f. Official unemployment rate (= b*100/c).......... 16 378 5 980 22 358 15 320 37 678 26.7% 16 288 6 083 22 370 15 462 37 832 27.2% 16 380 6 209 22 589 15 395 37 985 27.5% 16 529 6 139 22 668 15 466 38 134 27.1% 16 291 6 201 22 492 15 791 38 283 27.6% Source: Stats SA 27 Quarterly Bulletin June 2019 Finance, insurance, real estate and business Transport, storage and communication Trade, catering and accommodation Community, social and personal Annual averages
The number of unemployed South Africans increased by 62 000 (1.0%) in the first quarter of 2019 to approximately 6.2 million, and by 220 000 (3.7%) from a year earlier. As a result, the official unemployment rate increased from 27.1% in the fourth quarter of 2018 to 27.6% in the first quarter of 2019, up from 26.7% recorded a year earlier, mainly due to new entrants to the job market actively searching for work. Nevertheless, the number of discouraged work seekers increased by 210 000 (7.5%) year on year to a record high of 3.0 million in the first quarter of 2019. The seasonally adjusted unemployment rate decreased from 27.7% in the fourth quarter of 2018 to 27.2% in the first quarter of 2019. Disconcertingly, the youth unemployment rate (for people aged 15 to 24 years) increased from 54.7% in the fourth quarter of 2018 to 55.2% in the first quarter of 2019, up from 52.4% recorded a year earlier. Unemployment rate Per cent 28 27 26 25 24 2014 2015 2016 2017 2018 2019 Sources: Stats SA and SARB Labour cost and productivity The pace of increase in nominal remuneration per worker in the formal non-agricultural sector moderated from 5.5% in the third quarter of 2018 to 4.6% in the fourth quarter, as remuneration growth slowed in both the public and private sectors. On an annual average basis, growth in nominal remuneration per worker moderated from 6.4% in 2017 to a record low (since the inception of the data in 1971) of 4.7% in 2018, as both private and public sector remuneration growth per worker slowed. Growth in private sector nominal remuneration per worker decelerated from 4.3% in the third quarter of 2018 to an all-time low of 3.7% in the fourth quarter. Remuneration growth per worker was below the midpoint of the inflation target range in all of the private subsectors, except for the non-gold mining; the private community, social and personal services; and the manufacturing sectors. On average, private sector wage growth slowed from 5.0% in 2017 to 4.5% in 2018. Likewise, growth in nominal remuneration per public sector worker moderated from 8.5% in the third quarter of 2018 to 6.9% in the fourth quarter. The high third-quarter growth rate reflected the delayed implementation of the annual public sector wage increase, which included back pay. Nominal wage growth per worker moderated in all public sector tiers, with the exception of other public sector enterprises. In contrast to the private sector, public sector remuneration growth remained above the midpoint of the inflation target range in all of the public subsectors, except for the public transport, storage and communication services sector. Annual average remuneration growth per public sector worker halved from 10.7% in 2017 to 5.3% in 2018. 28 Quarterly Bulletin June 2019 Official Seasonally adjusted
Nominal remuneration per worker Percentage change over one year 10 8 6 4 2 2011 2012 2013 2014 2015 2016 2017 2018 * Adjusted for election-related outliers Midpoint of the inflation target range (4.5%) Sources: Stats SA and SARB According to Andrew Levy Employment Publications, the average wage settlement rate in collective bargaining agreements decreased to 7.1% in the first quarter of 2019 compared to 7.4% in the corresponding period of 2018, and averaged 7.2% for 2018 as a whole. The number of working days lost due to strike action rose from a low of 122 000 days in the first quarter of 2018 to 1.06 million days in the first quarter of 2019, and totalled 1.95 million days for 2018 as a whole. The marked increase in the number of working days lost due to strike action reflected the prolonged strikes at a gold-mining company and a large food manufacturing company, both of which started in November 2018 and progressed into the first quarter of 2019. Labour productivity in the formal non-agricultural sector contracted by 0.1% year on year in the fourth quarter of 2018 from a revised increase of 0.2% in the third quarter, as year-on-year output growth moderated while growth in employment increased marginally. For 2018 as whole, labour productivity increased by only 0.3% compared to 1.2% in 2017. Labour productivity and unit labour cost Percentage change over one year 10 8 6 4 Annual averages 2 0 2011 2012 2013 2014 2015 2016 20172018 * Formal non-agricultural sector Midpoint of the inflation target range (4.5%) Sources: Stats SA and SARB 29 Quarterly Bulletin June 2019 Economy-wide unit labour cost Unit labour cost* Labour productivity* (adjusted for election-related outliers) Total* Public* Private Annual averages
Growth in nominal unit labour cost in the formal non-agricultural sector decelerated from 5.3% in the third quarter of 2018 to 4.7% in the fourth quarter, as year-on-year growth in total remuneration slowed at a faster pace than that in output. On an annual average basis, growth in nominal unit labour cost slowed from 5.1% in 2017 to 4.4% in 2018 – its slowest pace since 2007. Year-on-year growth in economy-wide unit labour cost accelerated marginally from 4.0% in the third quarter of 2018 to 4.1% in the fourth quarter as year-on-year output growth slowed, while growth in the compensation of employees increased marginally. However, on an annual average basis, growth in economy-wide unit labour cost slowed notably from 5.9% in 2017 to 3.4% in 2018 – its slowest pace since 2001 and indicative of the lack of wage pressure in the economy. 5Unless stated to the contrary, all rates mentioned in this section reflect year-on-year changes. Prices5 Domestic inflationary pressures have increased gradually since January 2019 in the wake of higher international crude oil prices and the depreciation in the exchange value of the rand, as reflected by both the seasonally adjusted producer and consumer price indices. Almost all the main seasonally adjusted producer price indices (PPIs) have increased since January 2019, with the exception of the PPI for agriculture, forestry and fishing. The PPI for mining products increased the most, exacerbated by the depreciation in the exchange value of the rand. Producer prices Index: January 2019 = 100 Consumer prices Index: January 2019 = 100 110 116 114 108 112 106 110 108 104 106 102 104 102 100 100 98 98 Jan FebMarApr 2019 May Jun Jan Feb Mar Apr May Jun 2019 Mining Final manufactured goods Intermediate manufactured goods Agriculture Petrol Total goods Headline CPI Core CPI Sources: Stats SA and SARB The increase in the seasonally adjusted consumer price index (CPI) since the beginning of the year was driven by significantly higher domestic fuel prices, which contributed to an increase in the goods CPI. Although headline consumer price inflation accelerated from a recent low of 4.0% in January 2019 to 4.5% in May, it remained within the inflation target range for 26 consecutive months. Producer price inflation for final manufactured goods accelerated from 4.1% in January 2019 to 6.5% in April, led largely by the acceleration in price inflation for coal, petroleum and food products. Producer price inflation for intermediate manufactured goods accelerated from 3.8% in January 2019 to 6.7% in April, as price inflation in four of its six subcategories accelerated over the period. 30 Quarterly Bulletin June 2019 Seasonally adjusted Seasonally adjusted
Producer price inflation for mining products almost increased threefold from 7.7% in January 2019 to 21.1% in April, as all four subcategories accelerated. The acceleration in mining producer price inflation was aggravated by the depreciation in the exchange value of the rand against the United States (US) dollar from an average of R13.86 in January 2019 to R14.15 in April. Despite accelerating somewhat from November 2018 onwards, agriculture, forestry and fishing producer prices remained in deflation at 0.4% for a sixth successive month in March 2019, before reverting to inflation of 0.3% in April. Conversely, producer price inflation for electricity and water moderated from 7.7% in December 2018 to 5.9% in March 2019, before accelerating to 9.8% in April. Electricity producer price inflation slowed to 5.1% in March 2019 before quickening to 9.8% in April, while water producer price inflation remained unchanged at 10.9% for nine consecutive months up to March 2019 before slowing somewhat to 9.7% in April. Consumer goods price inflation, which quickened from 2.8% in January 2019 to 4.2% in April and May, drove the acceleration in headline consumer price inflation. In particular, non-durable goods price inflation accelerated from 3.2% to 5.2% over this period as fuel price inflation accelerated following the increase in international crude oil prices. However, durable and semi-durable goods price inflation remained relatively muted and amounted to 1.9% and 1.7% respectively in May 2019. Omitting more volatile goods – notably food and non-alcoholic beverages, fuel and electricity – underlying goods price inflation dipped below the lower level of the inflation target range in August 2017 and only breached it again in March 2019 before slowing to 3.0% in May. Consumer goods price inflation Percentage change over 12 months 9 8 7 6 5 4 3 2 1 2014 2015 2016 2017 2018 2019 Midpoint of the inflation target range (4.5%) Sources: Stats SA and SARB By contrast, consumer services price inflation moderated from 5.2% in January 2019 to 4.6% in April and May, mainly due to lower rental price inflation, which accounts for just more than a third of the total consumer services price basket. The moderation in rental inflation reflects the lacklustre residential property market amid weak rental demand, and slowing wage and household consumption expenditure growth. Excluding the more rigid administered services prices, underlying consumer services price inflation receded to below the midpoint of the inflation target range in March 2019 and slowed further to 4.2% in April and May. The relatively muted rates of inflation in both the underlying consumer goods and services price measures confirm the lack of pricing power in the domestic economy. 31 Quarterly Bulletin June 2019 Total goods Underlying goods
Consumer services price inflation Percentage change over 12 months 7 6 5 4 3 2 2014 2015 2016 2017 2018 2019 Midpoint of the inflation target range (4.5%) Sources: Stats SA and SARB The US dollar-denominated international food price index of the Food and Agriculture Organization (FAO) of the United Nations remained relatively steady in the first three months of 2019 before increasing to an 11-month high in May 2019. Higher dairy and meat prices and, to a lesser extent, oil and sugar quotations drove the increase, which was partly offset by lower cereal prices. Nevertheless, international food prices were still 1.9% lower in May 2019 than a year earlier. International US dollar-denominated cereal prices fell notably for four consecutive months up to April 2019 following sharp declines in wheat and maize prices, owing to an oversupply amid lower global demand and favourable prospects for this year’s harvest. Consequently, international cereal price inflation moderated sharply from 7.7% in January 2019 to -6.0% in May. Similarly, the 12-month rate of increase in the rand-denominated FAO food price index accelerated to 13.0% in May 2019 following the depreciation in the exchange value of the rand, while the year-on-year rate of increase in the rand-denominated international cereals price index moderated to only 8.4% over the same period. Domestic consumer food price inflation moderated to 2.3% in January 2019 and remained unchanged up to April, before accelerating to 2.8% in May. Food price inflation Percentage change over 12 months 15 50 12 40 9 30 6 20 3 10 0 0 -10 -3 2015 2016 2017 2018 2019 2014 Source: Stats SA 32 Quarterly Bulletin June 2019 Final manufactured producer Consumer Agricultural producer (right-hand scale) Total services Underlying services
The acceleration in bread and cereals price inflation to 7.8% in May 2019 was largely offset by the continued slowdown in meat price inflation to -0.9% in May. Agricultural producer food price inflation accelerated from -6.2% in November 2018 to -0.9% in April 2019, largely due to smaller price decreases of live animals and animal products, while producer prices of cereals and other crops remained elevated. However, unprocessed consumer food price inflation, with a weight of 44% in the total consumer food price basket and which usually lags agricultural producer price inflation, moderated further from 4.2% in July 2018 to 0.6% in March 2019 before accelerating slightly to 1.3% in May. Food price inflation Percentage change over 12 months 15 35 12 28 9 21 6 14 3 7 0 0 -3 -7 2015 2016 2017 2018 2019 2014 Source: Stats SA Producer food price inflation at the final manufactured level accelerated from a low of -1.4% in April 2018 to 5.3% in April 2019 – the highest rate of increase in 23 months. The acceleration was largely underpinned by a notable increase in grain mill and bakery product prices, while meat and meat product prices decreased. Processed food price inflation at the consumer level, with a weight of 56% in the overall consumer food price basket and which usually lags final manufactured producer food price inflation, followed suit and accelerated to 4.8% in May 2019, driven largely by higher bread and cereals prices. Food price inflation Percentage change over 12 months 15 12 9 6 3 0 -3 2014 2015 2016 2017 2018 2019 Source: Stats SA 33 Quarterly Bulletin June 2019 PPI: final manufactured CPI: processed food CPI: unprocessed food PPI: agriculture (right-hand scale)
Despite the acceleration in headline consumer price inflation, underlying inflationary pressures remained fairly subdued in an environment of weak domestic demand where margins are tight and firms are constrained to fully pass on cost increases to consumers. When subtracting the impact of food, non-alcoholic beverages and petrol prices from headline consumer price inflation, underlying inflation remained unchanged at 4.6% in the three months to March 2019, before slowing further to 4.3% in May. Likewise, the SARB’s preferred measure of core inflation, which also excludes electricity prices, remained at 4.4% in the five months up to March 2019 before slowing to 4.1% in April and May – its thirteenth consecutive month below the midpoint of the inflation target range. Headline and underlying measures of consumer price inflation Percentage change over 12 months 8 7 6 5 4 3 Consumer price index excluding food* and fuel 2 1 2014 2015 2016 2017 2018 2019 * Food includes non-alcoholic beverages Midpoint of the inflation target range (4.5%) Source: Stats SA Administered price inflation accelerated from a low of 5.0% in January 2019 to 8.2% in May, driven by an acceleration in fuel price inflation from -1.2% to 11.6% over the same period. Domestic fuel prices increased for five successive months up to June 2019 as international crude oil prices increased and the exchange value of the rand depreciated. However, when excluding the effect of fuel prices from the calculation, administered price inflation remained at 7.6% for eight consecutive months up to February 2019 before slowing to 6.8% in April and May, as the 1 percentage point increase in the value-added tax (VAT) rate from 1 April 2018 fell out of the CPI base, which lowered price inflation in some administered price categories. When also excluding electricity prices, administered price inflation remained at around 7.5% from July 2018 to March 2019, before also slowing to 6.8% in April and May. Average annual headline inflation expectations, as reflected in the survey conducted by the BER in the first quarter of 2019, declined across all respondent groups for both 2019 and 2020 relative to the previous quarter. The average for 2019 declined markedly from 5.4% to 4.8%, and for 2020 from 5.4% to 5.2%. Inflation is expected to edge up marginally to 5.3% in 2021. Business representatives made the biggest downward adjustment to their expectations, namely from 5.7% to 5.1% for 2019, and from 5.8% to 5.3% for 2020. Trade union representatives scaled their forecasts for 2019 and 2020 back by 0.5 and 0.3 percentage points respectively, while analysts lowered theirs by 0.5 and 0.1 percentage points respectively. The 2019 and 2020 expectations of all the respondent groups declined to their lowest levels since surveyed for the first time in the first quarter of 2017 and 2018 respectively. Inflation expectations are also quite low in a historical context, with current and one-year-ahead expectations at their lowest levels since the third quarter of 2006. 34 Quarterly Bulletin June 2019 Consumer price index Consumer price index excluding food*, fuel and electricity
Headline consumer price inflation expectations Per cent, as surveyed in the first quarter of 2019 Financial analysts Business representatives Trade union representatives All surveyed participants Average inflation expected for: 2019.......................................................... 2020.......................................................... 2021.......................................................... The next five years .................................... 4.7 5.2 5.2 5.1 5.1 5.3 5.5 5.3 4.8 5.0 5.2 4.9 4.8 5.2 5.3 5.1 Source: BER After falling to 5.3% in the fourth quarter of 2018, average annual five-year inflation expectations declined further to 5.1% in the first quarter of 2019 – a record low since their inception in 2011. Annual headline consumer price inflation Percentage change over one year 12 11 10 9 8 7 6 5 4 3 2 1 0 Actual 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Midpoint of the inflation target range (4.5%) Sources: Stats SA and BER 35 Quarterly Bulletin June 2019 Expected
External economic accounts Current account6 South Africa’s trade surplus narrowed from R71.8 billion in the fourth quarter of 2018 to R43.0 billion in the first quarter of 2019, as the value of net gold and merchandise exports decreased more than that of merchandise imports. The decrease in the value of merchandise exports mostly reflected lower volumes, while both lower prices and volumes contributed to the decrease in the value of imports. 6Unless stated to the contrary, the current account transaction flows referred to in this section are all seasonally adjusted and annualised. Current account of the balance of payments R billions, seasonally adjusted and annualised 2018 2019 Q1 Q2 Q3 Q4 Year Q1 Merchandise exports ....................................................... 1 065 1 115 1 235 1 287 1 176 1 194 Net gold exports.............................................................. 77 70 73 67 72 56 Merchandise imports ....................................................... -1 152 -1 160 -1 298 -1 283 -1 223 -1 207 Trade balance ................................................................. -10 25 10 72 24 43 Net service, income and current transfer payments......... -208 -208 -191 -182 -197 -185 Balance on current account ........................................... -218 -183 -180 -110 -173 -142 As a percentage of gross domestic product Trade balance.................................................................. -0.2 0.5 0.2 1.4 0.5 0.9 Services balance ............................................................. -0.1 -0.1 -0.2 -0.2 -0.2 -0.3 Income balance ............................................................... -3.4 -3.5 -3.0 -2.8 -3.2 -2.8 Current transfer balance .................................................. Balance on current account ........................................... -1.0 -4.6 -0.7 -3.8 -0.6 -3.7 -0.7 -2.2 -0.7 -3.5 -0.7 -2.9 Components may not add up to totals due to rounding off Sources: Stats SA and SARB The smaller trade surplus, together with a somewhat larger shortfall on the services, income and current transfer account, caused the deficit on the current account of the balance of payments to widen from R110 billion in the fourth quarter of 2018 to R142 billion in the first quarter of 2019. As a percentage of gross domestic product (GDP), the deficit on the current account widened from 2.2% to 2.9% over the same period. The value of merchandise exports decreased by 7.2% in the first quarter of 2019 after three consecutive quarterly increases as mining, manufacturing and agricultural exports contracted. Mining exports were severely affected by operational challenges, such as labour strikes and power supply disruptions. The value of exported platinum group metals (PGMs), pearls, precious and semi-precious stones as well as base metals and articles of base metals decreased notably. PGM exports were also adversely affected by planned stocktaking and maintenance in addition to electricity-supply disruptions. By contrast, the value of mineral exports increased in the first quarter of 2019, along with an increase in iron ore and, to a lesser extent, copper ore and concentrates exports. 36 Quarterly Bulletin June 2019
Current account of the balance of payments R billions 150 100 50 0 -50 -100 -150 -200 -250 Per cent 0 0 -50 -2 -100 -4 -150 -200 -6 -250 -8 -300 2014 2015 2016 2017 2018 2019 Seasonally adjusted and annualised Sources: Stats SA and SARB The value of manufactured exports decreased in the first quarter of 2019 due to contractions in the exports of vehicles and transport equipment, machinery and electrical equipment, prepared foodstuffs, beverages and tobacco, and textiles and textile articles. The value of agricultural exports also declined due to contractions in the exports of live animals and animal products as well as vegetable products, which was impacted by a decline in the export of maize. Value of merchandise exports R billions 750 110 650 100 550 90 450 80 350 70 60 250 2015 2014 2016 2017 2018 2019 Seasonally adjusted and annualised Sources: Stats SA and SARB 37 Quarterly Bulletin June 2019 Mining Manufacturing Agriculture (right-hand scale) Balance on current account Current account to GDP (right-hand scale) Trade balance Balance on services, income and current transfer account
The United States (US) dollar price of a basket of domestically produced non-gold export commodities decreased by 2.2% from the fourth quarter of 2018 to the first quarter of 2019. This decrease largely reflected a sharp contraction in the international price of coal due to import restrictions imposed by the Chinese government, which outweighed higher prices of commodities such as iron ore, nickel and copper. The marked increase in the price of iron ore reflected supply disruptions owing to the collapse of a tailings dam at a Brazilian iron ore mine towards the end of January 2019. The incident not only halted operations at the affected mine, but also triggered output reductions at other mines due to security reviews. International prices of selected South African export commodities US dollar index: 2010 = 100 120 100 Nickel Iron ore Platinum 80 60 40 20 2014 2015 2016 2017 2018 2019 Sources: World Bank and SARB The rand price of merchandise exports decreased by 0.4% in the first quarter of 2019 after remaining broadly unchanged in the fourth quarter of 2018. However, the volume of merchandise exports declined by 6.9% following three consecutive quarterly increases. The contraction in export volumes reflected domestic production challenges and lower global demand. The average US dollar price of gold on the London market increased by 6.2%, from US$1 229 per fine ounce in the fourth quarter of 2018 to US$1 304 per fine ounce in the first quarter of 2019. The US Federal Reserve’s pause in monetary tightening supported demand for gold over this period. Even though the average realised rand price of net gold exports also increased, the value of net gold exports decreased in the first quarter of 2019 due to a sharp contraction in the volume of net gold exports. The lower volume of net gold exports reflected the sharp decrease in domestic gold production, which was impacted by a five-month strike at a large gold mine and electricity shortages. The value of merchandise imports declined further by 5.9% in the first quarter of 2019 following a modest decrease of 1.1% in the fourth quarter of 2018, as mining, manufacturing and agricultural imports contracted. The value of mining imports reflected decreases in mineral products as well as pearls, precious and semi-precious stones. Mineral products in particular reflected a contraction in the value of crude oil imports, as both the physical quantity and the average quarterly rand price decreased. The value of manufactured imports contracted in the first quarter of 2019 as decreases in chemical products and other manufactured products exceeded the increase in vehicles and transport equipment. The value of imported agricultural products also declined over the same period. 38 Quarterly Bulletin June 2019 Coal SA export commodity basket (excluding gold) Copper
Value of merchandise imports R billions 1 400 1 200 1 000 800 600 400 200 0 350 300 250 200 150 100 50 0 2014 2015 2016 2017 2018 2019 Seasonally adjusted and annualised Sources: Stats SA and SARB The rand price of merchandise imports declined by 4.4% in the first quarter of 2019 on account of movements in the external value of the rand and in the international price of crude oil. At the same time, the volume of merchandise imports also contracted by 1.5% for a second consecutive quarter. As a result, the import penetration ratio – real merchandise imports as a ratio of real gross domestic expenditure (GDE) – decreased from 26.8% in the fourth quarter of 2018 to 26.1% in the first quarter of 2019. Terms of trade* Index: 2010 = 100 115 110 105 100 95 2014 2015 2016 2017 2018 2019 * Including gold Sources: Stats SA and SARB 39 Quarterly Bulletin June 2019 Mineral products Chemical products Resins, plastics and articles Total
South Africa’s terms of trade improved notably in the first quarter of 2019 as the rand prices of exports increased while those of imports decreased. Slightly larger deficits in two of the three sub-accounts of the services, income and current transfer account contributed to a marginal widening of the shortfall on this account, from R182 billion in the fourth quarter of 2018 to R185 billion in the first quarter of 2019. Expressed as a percentage of GDP, the deficit widened from 3.6% to 3.8% over the same period, but nevertheless still showed an improvement compared to the 4.4% recorded in the first quarter of 2018. Services, income and current transfer balance Per cent 0.0 -0.5 -1.0 -1.5 -2.0 -2.5 -3.0 -3.5 -4.0 Services, income and current transfer balance to GDP -4.5 -5.0 2014 2015 2016 2017 2018 2019 Seasonally adjusted and annualised Sources: Stats SA and SARB The widening of the shortfall on the services, income and current transfer account was contained by the income deficit, which remained virtually unchanged. This resulted from an increase in dividend receipts, from an already high level in the fourth quarter of 2018, which was further supported by a slight decrease in dividend payments. By contrast, an increase in gross interest payments in the first quarter of 2019 prevented a further narrowing of the income deficit. 40 Quarterly Bulletin June 2019 Box 2The characteristics of interest payments in South Africa’s balance of payments1, 2 Interest paid3 to non-residents is the second largest payment category (after dividends) in the services, income and current transfer account of South Africa’s balance of payments. These interest payments are related to the debt4 portion of total foreign liabilities, in particular general government rand-denominated debt held by non-residents. Interest payments also dwarf receipts as interest rates on general government rand-denominated and foreign currency-denominated debt liabilities exceed that on foreign debt assets. The significant increase in interest payments by general government since 2010 has impacted both the income and current account balances. Notwithstanding this, South Africa’s interest payments as a percentage of gross domestic product (GDP) remained internationally comparable. Similar to other countries, this ratio reflects developments in both the stock of foreign debt and interest rates. 1 The methodology used to compile balance of payments statistics adheres to the guidelines of the Balance of Payments and International Investment Position Manual – Sixth Edition (BPM6) of the International Monetary Fund, available at www.imf.org/external/pubs/ft/bop/2007/pdf/bpm6.pdf 2 This box relates to the statistics published in the tables on pages S–87 and S–92 of this Quarterly Bulletin and some unpublished data in respect of interest payments by general government. 3 In the balance of payments, interest paid is measured at date payable, on an accrual basis. 4 Debt includes debt securities, short-and long-term loans, and deposits. Average since 2014
100 80 2 000 2010 11 12 13 14 15 16 2010 11 12 13 14 15 16 17 2018 17 18 2019* 41 Quarterly Bulletin June 2019 Components of the current account balance As a percentage of gross domestic product Trade balance................................................ Services, income and current transfer balance............................................. Current account balance ............................ Memorandum items Income balance ............................................. Interest balance.......................................... Interest receipts ....................................... Interest payments 2010 2011 2012 2013 2014 2015 2016 2017 2018 2.21.6-1.1 -2.0 -1.4 -1.2 0.71.40.5 -3.7 -3.8 -4.0 -3.8 -3.6 -3.5 -3.6 -3.9 -4.0 -1.5 -2.2 -5.1 -5.8 -5.1 -4.6 -2.9 -2.5 -3.5 -2.1 -2.6 -2.7 -2.6 -2.7 -2.5 -2.8 -3.0 -3.2 -0.6 -0.7 -1.0 -1.2 -1.2 -1.3 -1.3 -1.6 -1.7 0.40.40.40.40.50.50.60.50.5 1.01.11.41.61.71.81.92.12.2 Components may not add up to totals due to rounding off Sources: Stats SA and SARB Interest payments (outflows in the balance of payments) reflect non-residents’ return on debt extended to residents (stock position of foreign debt as part of South Africa’s foreign liabilities in the international investment position). It is noteworthy that interest payments as a ratio of GDP more than doubled from 1.0% in 2010 to 2.2% in 2018, while interest receipts continued to average close to 0.5%, resulting in a deterioration in the interest balance from -0.6% to -1.7% over the same period. Total foreign liabilities* Interest payments and receipts R billionsR billions 7 000 120 6 000 5 000 4 000 60 3 000 40 1 000 20 0 0 * As at end of December * First quarter 2019, seasonally adjusted and ** Other foreign liabilities comprise equity and annualised investment fund shares, special drawing rights and financial derivatives Source: SARB The surge in interest payments reflects the significant increase in total foreign debt as from 2010, in particular the more than fourfold increase in general government debt as well as the concomitant increase in the contribution of interest payments by general government to total interest payments, from 37.0% in 2010 to 66.7% in 2018. Payments Receipts Debt Other**
2010 11 12 13 14 15 16 17 2018 2010 11 12 13 14 15 16 17 18 2019* 2010 11 12 13 14 15 16 17 2018 2010 11 12 13 14 15 16 17 2018 42 Quarterly Bulletin June 2019 Total foreign debt* Institutional sector composition of interest payments R billionsR billions 3 000 120 110 2 500 100 90 2 000 80 70 1 500 60 50 1 000 40 30 500 20 10 0 0 * As at end of December* First quarter 2019, seasonally adjusted and annualised Source: SARB The significant increases in both general government debt and the associated interest payments reflect non-residents’ increased holdings of both foreign currency-denominated debt and rand-denominated debt in particular. Currency denomination of general government foreign debt* R billionsIndex: 2010 = 100 1 000 500 450 800 400 350 600 300 250 400 200 150 200 100 50 0 0 Foreign currency Rand * As at end of December Source: SARB A comparison of South Africa’s average annual interest payments and foreign debt as a percentage of GDP with a selection of countries from 2010 to 2017 shows that, for advanced economies, both ratios generally improved during the period 2014 to 2017 compared to the period 2010 to 2013. However, for emerging market economies, both ratios mostly deteriorated, including South Africa. At a country level, the relationship between interest payments and foreign debt also reflects, among other factors, divergences in credit worthiness. General government Other General government Other
United Kingdom** United Kingdom** Sweden** Sweden** Hungary Germany** Poland Australia** Chile South Africa Mexico Russia South Africa Peru Peru Phillipines Argentina Colombia Brazil India United Kingdom** United Kingdom** France** Sweden** Hungary Australia** Peru Colombia The services deficit widened somewhat in the first quarter of 2019 as receipts contracted more than payments, amid subdued economic conditions. The relatively large contribution of travel receipts to total services receipts moderated the widening in the services deficit, as gross travel receipts increased slightly in the first quarter of 2019 after remaining relatively unchanged in the fourth quarter of 2018. The slight increase in net current transfer payments in the first quarter of 2019 mostly reflected a decrease in gross current transfer receipts. Financial account The financial account of South Africa’s balance of payments (excluding unrecorded transactions) recorded a larger inflow of capital of R24.1 billion in the first quarter of 2019 following an inflow of R16.6 billion in the fourth quarter of 2018. On a net basis, portfolio investment and reserve assets recorded inflows, while direct investment, financial derivatives and other investment registered outflows. As a ratio of GDP, net financial account inflows increased from 1.3% in the fourth quarter of 2018 to 2.0% in the first quarter of 2019. 43 Quarterly Bulletin June 2019 Average annual interest payments Average annual foreign debt of by selected countries selected countries Percentage of GDP*Percentage of GDP* Netherlands** Netherlands** HungaryFrance** France**Germany** Australia**United States** United States**Poland Mexico Turkey ChilePhillipines Argentina Thailand Turkey Russia BrazilColombia ThailandIndia 0 2 4 6 8 10 12 0 100 200 300 400 500 600 Netherlands** Netherlands** HungaryFrance** ChileGermany** Sweden** Australia** South Africa United States** Germany** Poland MexicoChile United States**Mexico PolandTurkey ColombiaSouth Africa 44.6 Russia Peru Brazil Russia Argentina Brazil TurkeyThailand IndiaPhillipines Phillipines Argentina Thailand India 0 2 4 6 8 10 12 0 100 200 300 400 500 600 * Ratio calculated using nominal aggregates in US dollar **Advanced economies Sources: IMF and SARB 2014–2017 2014–2017 1.9 2010–2013 1.3 2010–2013 32.7
Net financial transactions R billions 2018 2019 Q1 Q2 Q3 Q4 Year Q1 Change in liabilities Direct investment ................................................ Portfolio investment ............................................ Financial derivatives............................................ Other investment ................................................ Change in assets Direct investment ................................................ Portfolio investment ............................................ Financial derivatives ............................................ Other investment ................................................ Reserve assets ................................................... Total identified financial transactions*................... As a percentage of gross domestic product ....... 9.3 89.4 -59.6 1.1 40.9 16.6 -45.5 13.7 28.7 17.9 -65.4 -8.7 -8.2 -33.9 -47.9 112.7 70.7 90.0 -218.4 118.8 11.7 29.2 -43.0 35.8 -20.8 -15.9 53.3 -21.6 14.6 49.7 4.3 -3.2 -8.7 50.4 6.5 -23.5 47.3 3.9 -13.0 -2.8 69.9 -2.0 3.8 28.4 2.3 -23.3 -29.3 51.8 0.9 -6.2 16.6 1.3 -60.3 -56.7 225.4 -16.2 -11.3 142.0 2.9 -15.3 -17.9 40.9 -51.6 34.2 24.1 2.0 * Excluding unrecorded transactions. Components may not add up to totals due to rounding off. Inflow (+) outflow (-) Source: SARB Foreign-owned assets in South Africa South Africa’s direct investment liabilities reverted from an outflow of R8.2 billion in the fourth quarter of 2018 to an inflow of R11.7 billion in the first quarter of 2019, as domestic private sector companies received equity and debt funding from foreign parent companies. Portfolio investment liabilities also reverted from an outflow of R33.9 billion in the fourth quarter of 2018 to an inflow of R29.2 billion in the first quarter of 2019, as non-residents’ acquisition of domestic debt securities exceeded net sales of domestic equities. Net purchases of debt securities of R35.9 billion in the first quarter of 2019 reflected a reversal from net sales of R18.2 billion in the previous quarter. Net sales of domestic equities of R6.8 billion in the first quarter of 2019 brought cumulative net sales for the past three quarters to R29.9 billion. Other investment liabilities recorded a further inflow of only R35.8 billion in the first quarter of 2019 following an inflow of R113 billion in the fourth quarter of 2018. The inflow in the first quarter of 2019 comprised mostly short-term loans to the domestic private non-banking sector, which was partly offset by non-residents’ withdrawal of deposits from domestic banks. 44 Quarterly Bulletin June 2019
Financial account of the balance of payments R billions 40 30 20 10 0 -10 -20 -30 -40 -50 100 80 60 40 20 0 -20 -40 -60 -80 120 100 80 60 40 20 0 -20 -40 -60 100 80 60 40 20 0 -20 2014 2015 2016 2017 2018 2019 Source: SARB 45 Quarterly Bulletin June 2019 Total (including reserve assets and financial derivatives, excluding unrecorded transactions) Net other investment Net portfolio investment Net direct investment
South African-owned assets abroad South Africa’s direct foreign investment assets increased by R15.3 billion in the first quarter of 2019 following acquisitions of R23.3 billion in the fourth quarter of 2018. The outflow in the first quarter of 2019 could be attributed to an increase in South African private non-banking companies’ equity holdings in foreign subsidiaries and associates as well as the extension of loans to these companies. South African residents’ acquisition of foreign portfolio assets of R17.9 billion in the first quarter of 2019 was less than the R29.3 billion recorded in the fourth quarter of 2018. In the first quarter of 2019, the domestic private non-banking sector acquired foreign equity and debt securities, while the domestic banking sector acquired foreign debt securities. Other investment assets reverted from a small inflow of R0.9 billion in the fourth quarter of 2018 to an outflow of R51.6 billion in the first quarter of 2019, as the domestic banking sectors’ loans to non-residents under repurchase agreements increased and the private non-banking sector extended short-term loans to non-residents. Foreign debt South Africa’s total external debt increased from US$168 billion at the end of September 2018 to US$172 billion at the end of December and, in rand terms, increased from R2 381 billion to R2 491 billion over the same period. Foreign currency-denominated external debt increased from US$83.4 billion at the end of September 2018 to US$87.9 billion at the end of December. The domestic banking sector’s foreign currency-denominated debt balance increased due to short-term loans from non-residents. Foreign debt US$ billions 120 200 Rand-denominated 100 (right-hand scale) 180 80 60 160 40 140 20 0 120 Per cent 180 160 140 120 100 80 60 40 20 0 60 50 40 30 20 10 0 2013 2014 2015 2016 2017 2018 Source: SARB 46 Quarterly Bulletin June 2019 Debt to export earnings Debt to GDP (right-hand scale) Foreign currency-denominated Total
Foreign debt of South Africa US$ billions at end of period 2017 2018 Q3 Q4 Q1 Q2 Q3 Q4 Foreign currency-denominated debt.................. Debt securities .................................................... Other ................................................................... Public sector ................................................... Monetary sector .............................................. Non-monetary private sector ........................... Rand-denominated debt .................................... Debt securities................................................. Other ............................................................... Total foreign debt ............................................... As a percentage of gross domestic product .... As a percentage of total export earnings ......... 76.5 26.7 49.8 9.6 17.9 22.3 86.8 50.3 36.5 163.3 47.8 152.1 75.9 26.7 49.2 9.9 17.1 22.2 97.4 57.6 39.8 173.3 49.6 158.0 75.9 26.7 49.2 10.4 15.4 23.4 107.3 65.2 42.1 183.2 50.7 162.4 81.6 29.3 52.3 10.1 16.3 25.9 89.2 52.4 36.8 170.8 46.1 148.6 83.4 30.7 52.7 10.4 14.3 28.0 84.7 49.7 35.0 168.1 45.6 144.6 87.9 30.7 57.2 10.4 18.6 28.2 84.5 48.1 36.4 172.4 46.8 146.8 Source: SARB Rand-denominated external debt, expressed in US dollar terms, decreased marginally from US$84.7 billion at the end of September 2018 to US$84.5 billion at the end of December. Non-resident’s net sales of domestic government bonds marginally exceeded the increase in their rand deposits with the South African banking sector. South Africa’s total external debt as a ratio of GDP increased from 45.6% at the end of September 2018 to 46.8% at the end of December. The ratio of external debt to total export earnings increased from 144.6% to 146.8% over the same period. International investment position South Africa’s positive net international investment position (IIP) decreased from R795 billion at the end of September 2018 to R552 billion at the end of December as the value of foreign assets decreased and that of foreign liabilities increased marginally. The decline in the value of foreign assets mainly reflected the effect of the sharp decline in global equity prices on portfolio investment assets. The decline of only 1.8% in the weighted average exchange rate of the rand in the fourth quarter of 2018 had a limited effect on both foreign assets and liabilities. The market value of South Africa’s foreign assets (outward investment) decreased further by 3.3%, from R7 247 billion at the end of September 2018 to R7 010 billion at the end of December, following a decrease of 1.7% in the third quarter. The market value of portfolio investment and financial derivatives declined, while that of all other functional categories increased marginally in the fourth quarter of 2018. The decline in the value of foreign portfolio assets resulted largely from a 14% decline in the US Standard & Poor’s (S&P) 500 Index. The increase in direct investments was mainly due to the acquisition of a foreign company by a company in the domestic insurance sector, while other investments reflected increased deposits by the domestic banking sector abroad. 47 Quarterly Bulletin June 2019
South Africa's international investment position R billions 7 600 1 200 7 200 1 000 6 800 800 6 400 600 6 000 400 5 600 200 5 200 0 4 800 -200 4 400 4 000 -400 2014 2015 2016 2017 2018 Source: SARB The market value of South Africa’s foreign liabilities (inward investment) increased marginally by 0.1%, from R6 452 billion at the end of September 2018 to R6 458 billion at the end of December, following a decrease of 1.9% in the third quarter. The slight increase in foreign liabilities resulted from an increase in other investments, while all other functional categories decreased. Other investment liabilities increased as non-residents extended loans to, and increased deposits with, the domestic banking sector. The decline in direct investment liabilities could mainly be attributed to equity valuation adjustments. The value of portfolio investment liabilities decreased as non-residents sold domestic shares and bonds on a net basis and as the FTSE/JSE All-Share Index (Alsi) declined by 5.3% over the period. As a ratio of South Africa’s annual GDP, foreign liabilities decreased from 133.9% at the end of September 2018 to 132.5% at the end of December, while foreign assets decreased from 150.4% to 143.8% over the same period. This resulted in the country’s positive net IIP declining to 11.3% of GDP at the end of December 2018, from 16.5% at the end of September. International reserves and liquidity South Africa’s international reserve assets decreased by R34.2 billion in the first quarter of 2019 following an increase of R6.2 billion in the fourth quarter of 2018. The US dollar value of South Africa’s gross gold and other foreign reserves (i.e. the international reserves of the SARB before accounting for reserves-related liabilities) decreased from US$51.6 billion at the end of December 2018 to US$49.7 billion at the end of March 2019, largely due to foreign currency payments made on behalf of the South African government and foreign exchange swaps conducted for liquidity management purposes. Gross gold and other foreign reserves decreased further to US$48.3 billion at the end of May 2019 as more foreign currency payments were made. South Africa’s international liquidity position7 increased from US$43.1 billion at the end of December 2018 to US$43.3 billion at the end of March 2019, before decreasing slightly to US$43.2 billion at the end of May. 7This is calculated as the SARB’s gross gold and foreign reserves minus foreign currency-denominated liabilities against both domestic and foreign counterparties plus/minus the forward position in foreign currency. 48 Quarterly Bulletin June 2019 Foreign liabilities Foreign assets Net international investment position (right-hand scale)
International reserves US$ billions Months 55 7.0 6.5 50 6.0 5.5 45 5.0 4.5 40 4.0 2014 Source: SARB 2015 2016 2017 2018 2019 The level of import cover (i.e. the value of gross international reserves relative to the value of merchandise imports as well as services and income payments) remained unchanged at 5.1 months between the end of December 2018 and the end of March 2019. Exchange rates8 The nominal effective exchange rate (NEER) of the rand decreased further by 0.8% in the first quarter of 2019 following a decrease of 1.8% in the fourth quarter of 2018. The NEER displayed renewed volatility in the first quarter of 2019, increasing by 7.3% in January 2019 and decreasing by 4.0% and 3.7% in February and March respectively. The increase in the NEER in January was, among other factors, supported by the release of the trade balance for November 2018 that reverted to a surplus, further monetary policy easing by the People’s Bank of China and another interest rate pause by the US Federal Reserve, all of which provided support to emerging market assets. In addition, the gold price also traded above U$1 300 per fine ounce for the first time since early 2018. 8Unless stated to the contrary, all percentage changes in this section are based on the end of period. Exchange rates of the rand Percentage change 29 Jun 2018 to 28 Sep 2018 28 Sep 2018 to 31 Dec 2018 31 Dec 2018 to 29 March 2019 29 Mar 2019 to 12 June 2019 Weighted average* .............................. Euro ..................................................... US dollar .............................................. Chinese yuan........................................ British pound ........................................ Japanese yen ....................................... -1.4 -2.8 -2.9 0.9 -2.2 -0.5 -1.8 -0.6 -2.0 -2.4 0.4 -5.5 -0.8 0.9 -1.0 -3.0 -3.1 0.3 -0.5 -2.0 -1.0 1.8 1.1 -3.3 * Trade-weighted exchange rate against a basket of 20 currencies (nominal effective exchange rate) Depreciation – appreciation + Source: SARB 49 Quarterly Bulletin June 2019 Gross reserves International liquidity position Import cover ratio (right-hand scale)
An appreciation of 8.5% in the exchange value of the rand against the US dollar in January 2019 was followed by depreciations of 4.5% and 4.4% in February and March respectively. The depreciation followed the release of the 2019 Budget Review, concerns about the potential impact of Eskom’s electricity outages on economic growth, the risk of successive fuel price increases to inflation, and uncertainty ahead of the national elections in May. The exchange value of the rand again appreciated in April 2019 following South Africa’s retention of a sovereign investment-grade rating. However, since the end of December 2018, the rand has underperformed the currencies of its peers, with the exception of the Turkish lira and the Argentine peso, which continued to depreciate. The rand depreciated in the aftermath of the national elections due to policy uncertainty and the larger-than-expected contraction in the domestic economy in the first quarter of 2019. Selected exchange rates against the US dollar Index: 3 December 2018 = 100 110 105 100 95 90 85 80 Dec 2018 Jan Feb Mar Apr May Jun 2019 Russian rouble South African rand Brazilian real Mexican peso Turkish lira Indian rupee Argentine peso Source: SARB The real effective exchange rate of the rand (REER) decreased by 8.3% from March 2018 to March 2019. This reflected an improvement in the external competitiveness of domestic producers in foreign markets. 50 Quarterly Bulletin June 2019 Stronger = higher
Effective exchange rates of the rand Index: 2010 = 100 100 Real effective exchange rate 90 80 70 60 50 2014 2015 2016 2017 2018 2019 Source: SARB Turnover in the South African foreign exchange market The net average daily turnover9 in the South African market for foreign exchange increased marginally by 1.1% to US$15.4 billion in the first quarter of 2019. The value of transactions against the rand increased from US$9.5 billion in the fourth quarter of 2018 to US$10.6 billion in the first quarter of 2019, while turnover in third currencies decreased from a net daily average of US$5.7 billion to US$4.8 billion over the same period. 9This is calculated as the daily average of all new foreign exchange transactions concluded during a specified period, adjusted for local interbank double-counting. Net average daily turnover in the South African foreign exchange market US$ billions 30 ransactions encies ransactions against the rand 25 20 15 10 5 0 2014 2015 2016 2017 2018 2019 Source: SARB 51 Quarterly Bulletin June 2019 Total T T in thi rd curr Stronger rand = higher Nominal effective exchange rate
Monetary developments, interest rates and financial markets Money supply Growth in the broadly defined money supply (M3) has exceeded the weak pace of expansion in nominal gross domestic product (GDP) since the start of 2018. Even though economic activity remained lacklustre, growth in M3 rebounded in the first quarter of 2019 as growth in the deposit holdings of both financial and non-financial companies accelerated. Growth in the deposit holdings of households bottomed out in the first quarter of 2019 after slowing alongside moderate wage growth during 2018. The quarter-to-quarter seasonally adjusted and annualised growth in M3 accelerated from 4.4% in the fourth quarter of 2018 to 6.2% in the first quarter of 2019. The income velocity of circulation of M3 decreased from 1.42 in the fourth quarter of 2018 to 1.37 in the first quarter of 2019 as the quarterly expansion in M3 exceeded that in nominal GDP. Money supply and gross domestic product Year-on-year percentage change 12 10 8 6 4 2 0 2014 2015 2016 2017 2018 2019 Sources: Stats SA and SARB Fluctuating in a fairly narrow range, year-on-year growth in M3 averaged 6.4% in 2017 and 6.2% in 2018. More recently, the moderation in growth in M3, from 7.0% in September 2018 to 5.1% in January 2019, made way for an acceleration to 6.9% in March and 8.8% in April. Growth in the deposit holdings of the corporate sector, which averaged only 4.8% in 2018, accelerated from 3.7% in January 2019 to 8.9% in April. Within the corporate sector, growth in the deposit holdings of non-financial companies10 slowed from a recent high of 10.1% in August 2018 to 3.2% in January 2019, before fluctuating higher to 5.2% in March and 8.0% in April. The acceleration was partly influenced by recent equitable share transfers to local governments and the distribution of fuel levy allocations to metropolitan municipalities. The muted growth in the deposit holdings of financial companies accelerated in recent months, from a low of 2.0% in November 2018 to 7.6% in March 2019 and 9.7% in April, amid risk aversion in the run-up to the national elections. Growth in the deposit holdings of the household sector slowed from an average of 9.7% in 2017 to 8.9% in 2018, before bottoming out at around the 8% level in the first four months of 2019. 10 The deposit holdings of the corporate sector include local government and municipal deposits. 52 Quarterly Bulletin June 2019 M3 Nominal GDP
Deposit holdings of households and companies Percentage change over 12 months 16 12 Financial companies 8 4 0 -4 2014 2015 2016 2017 2018 2019 Source: SARB The significant divergence in maturity preferences persisted as banks continued to offer attractive savings and investment products to attract longer-term deposits and as demand for low-risk investments increased ahead of the national elections. Growth in long-term deposits accordingly accelerated into double digits from late 2018, and fluctuated between 11.4% in October 2018 and 16.2% in April 2019. By contrast, growth in short-to medium-term deposits slowed notably during 2018 to a low of 1.1% in December and further to 0.7% in January 2019, before quickening to 6.6% in April. Growth in the more liquid cash, cheque and other demand deposits fluctuated in a narrow range at around 4.5% in 2018 before accelerating from 4.3% in January 2019 to 7.3% in April. Deposits by maturity Percentage change over 12 months 20 15 10 5 0 -5 -10 2014 2015 2016 2017 2018 2019 Source: SARB Total M3 deposit holdings reverted from a contraction of R3.2 billion in the fourth quarter of 2018 to an increase of R87.4 billion in the first quarter of 2019, which was also significantly up from the increase of R38.2 billion in the first quarter of 2018. Financial companies contributed R73.9 billion to the sizable increase of R75.8 billion in corporate sector deposits in the first quarter of 2019, while household sector deposits increased by only R11.6 billion. 53 Quarterly Bulletin June 2019 Cash, cheque and other demand Long term Short and medium term Households Non-financial companies
M3 holdings of households and companies Quarter-to-quarter change R billions Percentage of total M3 deposit holdings* 2018 2019 Q1 Q2 Q3 Q4 Q1 Households Companies: Total.................. Of which: Financial ........... Non-financial..... Total M3 deposits ................ 10.8 27.5 24.3 3.2 38.2 29.8 -36.8 -23.4 -13.4 -7.1 35.0 123.6 87.3 36.3 158.6 13.5 -16.7 -43.6 26.9 -3.2 11.6 75.8 73.9 1.9 87.4 34.5 65.5 36.8 28.7 100.0 * Expressed as a percentage of the total outstanding balance as at March 2019 Source: SARB The difference between the increase in claims on the domestic private sector of R94.3 billion and the increase in M3 of R87.4 billion in the first quarter of 2019 is explained by the increase of R41.2 billion in net foreign assets of the monetary sector, which reflected the depreciation in the exchange value of the rand, as well as declines in net other assets and net claims on the government sector of R46.8 billion and R1.3 billion respectively. Credit extension11 Growth in total loans and advances extended by monetary institutions to the domestic private sector accelerated moderately from November 2018 as the two-year upward trend in loans to households continued and as credit extended to companies rebounded. 11 Growth in credit extension was impacted by the implementation of International Financial Reporting Standard (IFRS) 9 from January 2018. Banks’ calculation of the provision for credit losses (impairments) changed fundamentally, which affected outstanding credit balances. For a more comprehensive analysis, see ‘Box 3: Impairments and credit statistics’ on page 52 of the June 2018 edition of the Quarterly Bulletin, also available at http://www.resbank.co.za /Lists/News%20and%20 Bank loans and gross domestic product Year-on-year percentage change 20 16 12 8 Publications/ Attachments/8593/01Full% 20Quarterly%20Bulletin%20 %E2%80%93%20June% 202018.pdf 4 0 Total loans and advances to the private sector Percentage change 15 10 5 0 2014 2015 2016 2017 2018 2019 * Growth rates impacted by the implementation of IFRS 9 from January 2018 Sources: Stats SA and SARB 54 Quarterly Bulletin June 2019 Over 12 months Quarterly at seasonally adjusted annualised rates * Loans to companies Loans to households Nominal GDP *
Growth in credit extended to the corporate sector accelerated from 3.2% in November 2018 to 8.8% in April 2019, while that in loans and advances to the household sector accelerated from 3.7% in January 2018 to 6.0% in April 2019. Households’ increased demand for credit amid benign consumer price inflation and low interest rates supported consumption expenditure somewhat. The quarter-to-quarter seasonally adjusted and annualised growth in total loans and advances to the domestic private sector accelerated from 3.1% in the fourth quarter of 2018 to 7.6% in the first quarter of 2019. The increase of R84.3 billion in the value of total loans and advances in the first quarter of 2019 exceeded the increase of R59.7 billion in the first quarter of 2018, with the latter affected by higher deductions for impairments following the implementation of International Financial Reporting Standard (IFRS) 9 as from January 2018. With the increase in credit extension exceeding that in nominal GDP, the ratio of credit to GDP increased from 72.4% in the fourth quarter of 2018 to 75.2% in the first quarter of 2019. Weaker growth in credit extension to the household sector from late 2012 to early 2017, together with a slowdown in credit extension to the corporate sector from mid-2014, affected growth in total loans and advances in both nominal and real terms during the current downward phase of the business cycle. Credit extension to both households and corporates supported the increase in nominal growth in total loans and advances from a recent low of 3.8% in May 2018 to 7.5% in April 2019. By contrast, real credit growth fluctuated around zero per cent from mid-2016 before accelerating to 2.2% in January 2019 when it breached the 2.0% level for the first time in 33 months. Thereafter, real credit growth accelerated further to 2.9% in April 2019 as growth in nominal credit extension continued to exceed consumer price inflation. Total loans and advances Percentage change over 12 months 12 10 8 6 4 2 0 -2 Real* -4 2014 2015 2016 2017 2018 2019 * Deflated with the consumer price index Source: SARB The increase in credit extension to the corporate sector of R56.9 billion in the first quarter of 2019 was significantly more than the R3.1 billion in the fourth quarter of 2018, and also by far exceeded the R38.0 billion in the first quarter of 2018. Increased demand for credit in the first quarter of 2019 originated mostly from non-financial companies in the consumer goods, manufacturing, construction and, to a lesser extent, the energy sectors. The utilisation of bank credit facilities by financial companies, particularly those in the securities trading industry, also increased in the first quarter of 2019. The sharp slowdown in growth in mortgage advances on commercial property in 2018 overshadowed the increase in mortgage advances on residential property. Growth in total mortgage advances fluctuated in a narrow range at around 4.5% from February 2017, reaching 4.6% in April 2019. Growth in mortgage advances on commercial property picked up from 5.4% 55 Quarterly Bulletin June 2019 Nominal
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in January 2019 to 5.7% in April, while that on residential and agricultural property levelled off at an average of 4.0% in the first four months of 2019, slightly above the average of 3.1% over the same period of 2018. Demand for mortgage advances was dampened by a lack of employment opportunities, modest property price increases, without compensation, and tight lending criteria. uncertainty regarding land expropriation Mortgage advances Percentage change over 12 months 18 16 14 12 10 8 6 4 2 0 2014 2015 2016 2017 2018 2019 Source: SARB The increase in credit extension to the household sector of R27.4 billion in the first quarter of 2019 reflected a general increase in all types of loans and advances, and was more than the R21.7 billion recorded in the same quarter of 2018. Year-on-year growth in total loans and advances to the household sector accelerated from 3.7% in January 2018 to 6.0% in April 2019, mostly supported by demand for general loans, which accelerated from 3.3% in January 2018 to more than 10% from late 2018. Growth in mortgage advances to households picked up slightly from 3.1% in March 2018 to 4.0% in April 2019, while instalment sale credit and leasing finance, credit card advances and overdrafts also accelerated to a more lively pace in recent months. Selected loans and advances to corporate sector Percentage change over 12 months Selected loans and advances to household sector Percentage change over 12 months 21 21 18 18 15 15 12 12 9 9 6 6 3 3 0 0 -3 -3 2017 2018 2019 2017 2018 2019 Mortgage advances General loans Instalment sale credit and leasing finance Overdrafts Source: SARB 56 Quarterly Bulletin June 2019 Commercial property Total Residential property
Growth in total instalment sale credit and leasing finance for the purchase of new and used vehicles accelerated from 5.0% in March 2018 to 8.8% in April 2019, despite fairly subdued vehicle sales. Weak income growth, together with the carbon tax, the increase in the fuel levy and higher vehicle running costs are some of the factors expected to place a damper on vehicle sales in 2019. Growth in overdrafts - the most volatile credit category - accelerated from 5.0% in February 2018 to 13.4% in August, then moderated to 7.8% in February 2019 before once again accelerating to 16.0% in April. The increased utilisation of overdraft facilities was especially evident in the corporate sector, with a moderate increase by the household sector. However, as at April 2019, overdrafts comprised only 2.9% of bank loans to the household sector and a slightly more significant 10.8% in the case of the corporate sector. Credit demand varied fairly widely across the domestic economic sectors in 2018 and in the first quarter of 2019. The demand for, and access to, credit by the construction and real estate sectors remained buoyant over this period, despite the contraction in construction output alongside declining investment in residential and non-residential buildings, and in civil construction works. Growth in credit extension to the mining and quarrying sector also remained buoyant in early 2019, although it only represented a small portion of overall bank credit extension. By contrast, credit extension to the wholesale and retail trade sector slowed noticeably in the first quarter of 2019 following robust growth in 2018, as economic conditions remained lacklustre. In addition, the increased uptake of credit by the business services and the manufacturing sectors may also be reflective of economic headwinds, such as weak demand, electricity load-shedding and weak confidence. Uncertainty related to the restructuring of the national power utility probably dampened banks’ willingness to extend credit to the electricity sector. Growth in bank credit by economic sector Percentage change over four quarters 2018 2019 Percentage of total credit extension* Economic sector Q1 Q2 Q3 Q4 Q1 Households .......................................................................... Finance and insurance ......................................................... Real estate ........................................................................... Wholesale and retail trade .................................................... Manufacturing ...................................................................... Business services ................................................................. Transport, storage and communication ................................ Electricity, gas and water...................................................... Agriculture, forestry and fishing............................................. Mining and quarrying ............................................................ Construction......................................................................... Community, social, personal services and other ................... Total ..................................................................................... 4.0 2.8 13.1 14.8 -6.7 -7.7 -5.0 24.7 7.2 -6.2 0.2 0.6 3.9 4.4 0.9 11.1 14.0 0.1 -1.4 -2.5 16.8 9.3 2.2 5.6 12.1 5.5 4.6 -7.9 10.1 16.6 1.0 -1.0 -1.3 4.2 6.0 16.1 5.9 17.0 4.3 5.8 -0.5 10.5 17.7 2.5 6.4 10.8 -0.4 4.8 24.2 10.1 8.2 6.2 6.2 0.8 5.6 6.7 9.5 7.0 10.2 1.2 5.4 29.3 17.7 10.5 6.3 35.2 17.3 10.9 5.5 4.5 3.4 3.2 2.5 2.4 1.8 0.9 12.6 100.0 * Expressed as a percentage of the total outstanding balance for March 2019 Source: SARB Interest rates and yields The SARB’s Monetary Policy Committee (MPC) has kept the repurchase rate unchanged at 6.75% since November 2018. At the recent policy meeting in May 2019, the MPC viewed the risks to the inflation outlook to be more or less evenly balanced. The committee continued to assess the current stance of monetary policy as broadly accommodative. 57 Quarterly Bulletin June 2019
Domestic short-term interest rates remained fairly stable in the first quarter of 2019 with a downward bias from early May, following the national elections. The 3-month Johannesburg Interbank Average Rate (Jibar) remained range-bound at around 7.15% from December 2018 to May 2019, before declining notably to 7.06% on 7 June. The 6-month Jibar also fluctuated within a narrow range of between 7.70% and 7.75% from December 2018 to April 2019, before edging lower during May, reaching 7.48% on 7 June. The benchmark 12-month Jibar displayed slightly more volatility, oscillating lower from 8.39% on 12 December 2018 to 8.15% in late April 2019 where it remained up to mid-May, before it continued lower to 7.82% on 7 June. Following the affirmation of South Africa’s investment grade sovereign debt rating by an international rating agency, the tender rate on 91-day Treasury bills decreased by 63 basis points from 7.61% on 21 December 2018 to a low of 6.98% on 29 March 2019. Amid uncertainty ahead of the national elections, the tender rate increased to 7.23% on 26 April but subsequently retraced to 7.11% on 7 June. Money market rates Per cent 9.0 8.5 8.0 7.5 7.0 6.5 6.0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 2016 2017 2018 2019 Source: SARB The South African Benchmark Overnight Rate (Sabor) and the overnight foreign exchange (FX) rate both fluctuated within the standing facility limits, reflecting stable funding conditions in the interbank lending market. The Sabor remained closely aligned to the unchanged repurchase rate and averaged 6.73% from January 2019 up to early June. The overnight FX rate – the rate Benchmark overnight rates Per cent 11 10 9 8 7 6 5 4 2016 2017 2018 2019 Source: SARB 58 Quarterly Bulletin June 2019 Standing facility upper band Overnight FX rate Sabor Standing facility lower band 12-month Jibar 6-month Jibar 3-month Jibar Repurchase rate 91-day Treasury bills
at which a depository institution lends funds to another against FX – became much less volatile from late February 2019, averaging around 6.81% from March 2019 to early June. On 7 June 2019 the Sabor and the overnight FX rate were at 6.72% and 6.95% respectively. Rates on forward rate agreements (FRAs) initially trended gradually lower in the first four months of 2019 alongside favourable inflation outcomes, but decreased sharply after the outcome of the national elections and the May MPC meeting. FRA rates across the maturity spectrum adjusted lower following the release of the MPC statement, which indicated an implied 25 basis point reduction in the repurchase rate by the end of the first quarter of 2020. For example, the 3x6-month FRA decreased by 31 basis points from 7.18% on 14 February 2019 to 6.87% on 7 June, while the 6x9-month and the 9x12-month FRA both decreased by more than 50 basis points to 6.69% and 6.67% respectively over the same period. Forward rate agreements Per cent 8.5 8.0 7.5 7.0 3x6 months 6x9 months 9x12 months 6.5 6.0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 2016 2017 2018 2019 Source: SARB Thus far in 2019, private sector banks have kept their deposit and lending rates relatively stable alongside the unchanged repurchase rate. The prime lending rate was maintained at 10.25% in the first six months of 2019, while the weighted-average flexible rate charged by banks on mortgage advances increased moderately from 9.65% in December 2018 to 9.77% in April 2019. The yield on 10-year South African rand-denominated government bonds issued and traded in the domestic market generally trended lower from 9.63% on 31 October 2018 to 8.84% on 24 May 2019. This reflected the overall appreciation in the exchange value of the rand over the period (in particular until 1 February 2019) as well as non-resident net purchases of domestic bonds thus far in 2019 in tandem with lower international bond yields. The downward trend in domestic bond yields was interrupted at the beginning of December 2018, early in February 2019 and again at the end of April due to bouts of currency weakness, higher consumer price inflation and the increase in international crude oil prices. The overall decline of 80 basis points in the yield on the 10-year South African government bond from the end of October 2018 to 24 May 2019 was closely aligned with the decline of 84 basis points in the 10-year US government bond yield over the same period. Subsequently, the two bond yields diverged as the South African bond yield increased by 23 basis points up to 7 June along with the depreciation in the exchange value of the rand, while the US bond yield continued lower by a noticeable 24 basis points over the same period. 59 Quarterly Bulletin June 2019 18x21 months
Ten-year government bond yields Per cent 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 6.5 3.5 3.0 2.5 2.0 1.5 1.0 Government bond yield and the exchange rate Per cent Rand per US dollar 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 6.5 17 16 15 14 13 12 11 10 9 8 2014 2015 2016 2017 2018 2019 Sources: IRESS, JSE and SARB The level of the yield curve moved lower and flattened somewhat from the end of October 2018 up to 24 May 2019, except the extreme short end of the curve which increased following a 25 basis point increase in the repurchase rate in November 2018. On balance, the yield gap (measured as the difference between yields at the extreme long and short ends of the curve) narrowed from 383 basis points on 25 October 2018 to 294 basis points on 24 May 2019. Changes in the level and shape of the yield curve reflected an overall appreciation in the exchange value of the rand over the period as well as increased demand for emerging market bonds as the US Federal Reserve put interest rate increases on hold. Consequently, the level of the yield curve increased up to 7 June, and more so at the medium to longer end of the curve. This contributed to a widening in the yield gap to 324 basis points on 7 June. Yield curve Per cent 11 10 9 8 25 October 2018 7 June 2019 24 May 2019 7 6 0 5 10 15 20 25 30 Unexpired maturity in years Sources: IRESS and JSE 60 Quarterly Bulletin June 2019 South African 10-year yield Exchange rate (right-hand scale) South Africa United States (right-hand scale)
The yield spread of emerging market US dollar-denominated bonds relative to US government bonds, as measured by the JPMorgan Emerging Markets Bond Index Plus (EMBI+),12 narrowed in January and February 2019 due to the US Federal Reserve’s pause in interest rate increases and a brief trade truce between the US and China. The EMBI+ then widened from 384 basis points in February 2019 to 442 basis points in May amid renewed emerging market risk aversion due to, among other factors, weak emerging market currencies (in particular the Turkish lira) and renewed US–China trade tensions. By contrast, South Africa’s sovereign risk premium13 on government’s US dollar-denominated bonds in the six-year maturity range narrowed notably from an average of 289 basis points in November 2018 to 244 basis points in April 2019, as South Africa maintained its sovereign investment-grade rating. Subsequently, the sovereign risk premium widened to 260 basis points in May along with the depreciation in the exchange value of the rand. 12 The EMBI+ measures the total returns on US dollar-denominated debt instruments of emerging market economies. 13 The differential between the yield on South African government US dollar-denominated bonds and that on US dollar-denominated bonds of the US government. Money market The daily liquidity requirement of private sector banks fluctuated in a wider range of between R50.9 billion and R60.0 billion in the first quarter of 2019 than in the final quarter of 2018. In April and May 2019, the actual daily liquidity requirement averaged R56.1 billion and R55.7 billion respectively. Liquidity requirement R billions 100 170 160 90 150 80 140 70 130 60 120 110 50 100 40 90 30 80 20 70 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 2016 2018 2019 2017 Source: SARB Money market liquidity contracted by a net amount of R8.8 billion in the first quarter of 2019, in contrast to an expansion of R9.5 billion in the fourth quarter of 2018. Notes and coin in circulation outside the SARB expanded money market liquidity by R18.4 billion in the first quarter of 2019, which was partly neutralised by an increase of R12.5 billion in private banks’ required cash reserve deposits. Liquidity management operations of the SARB, which included FX swaps of R27.5 billion and the placement of R8.0 billion worth of deposits by the Corporation for Public Deposits (CPD) at private sector banks also drained R19.2 billion, on balance, from the market. The FX transactions of the SARB in the spot market had only a slight tightening effect of R0.2 billion on overall money market liquidity. In April and May 2018, liquidity conditions eased by a marginal R0.2 billion, mainly through allowing FX swaps to mature in order to offset the contractionary impact of deposits made by government and the CPD with the SARB. Capital redemption and coupon interest payments on government bonds amounted to R50.6 billion in the first five months of 2019. The SARB’s relatively small portfolio of government bonds accrued total coupons of only R148 million over this period. 61 Quarterly Bulletin June 2019 Estimated weekly liquidity requirement Actual daily liquidity requirement Notes and coin in circulation (right-hand scale)
Factors influencing money market liquidity conditions Notes and coin in circulation Change in cash reserve accounts Spot FX transactions Government deposits with the SARB Reverse repurchase transactions SARB debentures -0.1 Forward position (swaps) CPD call deposits Other Liquidity provided to the banking system 0 10 -30 R billions -20 -10 20 30 January–March 2019 April–May 2019 Source: SARB Bond market The nominal value of public sector net bond issuance in the domestic primary bond market increased by 6.6% from the first five months of 2018 to R114 billion in the same period of 2019. By contrast, the private sector’s bond issuance switched from net redemptions of R7.0 billion in the first five months of 2018 to net issues of R26.5 billion over the same period of 2019, mainly as a result of increased net issuance by banks. Consequently, the total outstanding nominal amount of bonds in issue increased by 9.7% year on year to R3.1 trillion at the end of May 2019. Net issues in the domestic bond market R billions 30 25 20 15 10 5 0 -5 -10 Public sector -15 -20 2014 2015 2016 2017 2018 2019 Source: JSE 62 Quarterly Bulletin June 2019 Private sector -1.1 18.4 -12.5 4.1 -0.2 -0.2 10.0 -10.0 Tightening (draining) 0.3Easing (injecting) -27.5 12.9 8.0 -3.5 -5.3 -1.9 0.2 -8.8
In April 2019, national government increased the amount on offer at the weekly bond auction for both fixed-rate and inflation-linked bonds. Fixed-rate bonds were increased from R2.85 billion to R3.30 billion, and inflation-linked bonds from R0.65 billion to R0.76 billion. This reflected the increased borrowing requirement announced in the 2019 Budget Review. The oversubscription of bond auctions indicated the continued strong overall demand for government bonds. The first domestic commercial bank listed a bond in the Green Bond Segment of the JSE Limited (JSE) in April 2019. This followed the first green bond issuance by a domestic private company a year earlier, after the launch of this segment in October 2017. This segment provides a platform for companies to raise funds exclusively for climate and environmental projects. The daily average value of turnover in the domestic secondary bond market increased by 17.5%, from R122 billion in the first five months of 2018 to R143 billion in the same period of 2019. The increase was boosted by an all-time high in May and was supported by higher volumes. The outstanding amount of rand-denominated debt securities in issue in the European and Japanese bond markets decreased by R22.8 billion from May 2018 to May 2019. The outstanding amount fell from an all-time high of R320 billion in September 2016 to R262 billion in January 2019 – its lowest since September 2011 – and then increased slightly up to May. Issuances continued to reflect negative investor sentiment as South Africa remained closely monitored by international credit rating agencies. Outstanding amount of rand-denominated bonds in issue in international markets R billions 330 320 310 300 290 280 270 260 250 2014 2015 2016 2017 2018 2019 Source: Bloomberg Non-residents’ net purchases of domestic debt securities of R16.1 billion in the first quarter of 2019 followed net sales in the previous three quarters, as reported by the JSE. Further net purchases of R5.0 billion in April and May 2019 brought cumulative net purchases to R21.1 billion in the first five months of 2019 compared to net sales of R30.8 billion in the corresponding period of 2018. Non-residents’ net purchases of bonds were supported by the accommodative monetary policy stance of major central banks, a switch from equities to bonds following renewed concerns over the US–China trade dispute and its potential effect on global economic growth, and South Africa’s continued investment-grade rating. 63 Quarterly Bulletin June 2019
Non-resident net transactions in JSE-listed shares and bonds R billions 40 30 20 10 0 -10 -20 -30 -40 Net sales -50 -60 2014 2015 2016 2017 2018 2019 Source: JSE Share market The first listing on a new stock exchange in February 2017 ended the JSE’s reign of 129 years as the only stock exchange in South Africa. The four new exchanges, namely ZAR X, 4 Africa Exchange (4AX), A2X (primarily a secondary listings market) and the black economic empowerment focused Equity Express Securities Exchange (EESE), were established to increase diversity and economic inclusion for the advancement of economic growth and development. New South African stock exchanges* ZAR X 4AX A2X EESE First company listings Senwes (Feb 2017) NWK Holdings NWK (Sep 2017) African Rainbow Capital Investments Peregrine Holdings Coronation Fund Managers (Oct 2017) Ukhamba Holdings (Dec 2017) Type of listings Ordinary shares Preference shares Exchange-traded funds/notes Ordinary shares Preference shares Debt securities Exchange-traded notes Ordinary shares Preference shares Exchange-traded funds/notes Ordinary shares Preference shares Total number of listings to May 2019 3 5 20 4 * The Financial Sector Conduct Authority granted stock exchange licences to ZAR X and 4AX on 31 August 2016, A2X on 5 April 2017 and EESE on 11 September 2017. Sources: ZAR X, 4AX, A2X and EESE Equity capital raised by companies listed on the JSE in the domestic and international primary share markets increased by 17.8% to R21.4 billion in the five months to May 2019 compared to the corresponding period of 2018. The largest single contribution came from a domestic insurance company that issued shares for cash to specific investors to fund a broad-based black economic empowerment transaction. Companies in the financial sector of the JSE, mostly primary listings, raised 64.6% of the total in the first five months of 2019. 64 Quarterly Bulletin June 2019 Net purchases Shares Bonds
Thus far in 2019, turnover in the secondary share market of the JSE has remained subdued. The daily average value of turnover of R19.6 billion in the first five months of 2019 was 17.8% less than in the corresponding period of 2018. Lower volumes coincided with a decline in volatility, as measured by the South African Volatility Index. Consistent with higher share prices, the market capitalisation of all shares listed on the JSE increased from a recent low of R12.5 trillion in November 2018 to an all-time high of R16.6 trillion in April 2019. Subsequently, the market capitalisation declined to R15.6 trillion in May. Sizable non-resident net sales of JSE-listed shares in the last three quarters of 2018 persisted into 2019. Non-residents reduced their shareholdings by R24.7 billion in the first quarter of 2019 and by R10.7 billion in April and May, according to JSE data. This resulted in cumulative net sales of shares of R35.3 billion in the first five months of 2019 compared to net purchases of R13.0 billion over the same period of 2018, which reflected the weak domestic economic growth outlook as well as concerns over the trade dispute between the US and China, and its potential impact on global economic growth. Share prices of companies listed on the JSE increased in the first quarter of 2019 following losses in the second half of 2018, despite the contraction in real GDP and non-resident net sales. The FTSE/JSE All-Share Price Index (Alsi) increased by 7.1% in the first quarter of 2019 – its best first-quarter performance since 2007. The share prices of companies in the resources sector increased by 16.0% and those in the industrial sector by 6.8%, while financial share prices declined by 1.0% in the first quarter of 2019. The Alsi increased by 18.1%, from a recent low of 50 434 index points on 10 December 2018 to 59 545 index points on 23 April 2019 – its highest level since the end of August 2018. Higher share prices on the JSE were supported by advances in share prices on international bourses, higher commodity prices as well as the unchanged policy rate in the US since December 2018, and expectations that it might remain unchanged for a while. Subsequently, the Alsi declined by 8.9% to 54 271 index points on 23 May due to, among other factors, the renewed trade conflict between the US and China as well as between the US and the European Union. Thereafter, the Alsi increased by 7.1% to 58 100 index points on 7 June as the depreciation in the exchange value of the rand supported rand-hedged shares. FTSE/JSE All-Share Price Index Index: first quarter of 2007 = 100 Per cent 250 15 10 5 200 0 -5 150 -10 100 -15 -20 50 -25 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Index Quarter-to-quarter percentage change (right-hand scale) Sources: IRESS and JSE 65 Quarterly Bulletin June 2019
The overall historical price-earnings ratio of ordinary shares listed on the JSE increased from a recent low of 18.3 in December 2018 to 20.6 in May 2019, as earnings decreased while share prices increased. By contrast, the overall dividend yield declined from 2.6% to 2.1% over the same period. Market for exchange-traded derivatives The spot prices of maize contracts listed on the JSE Commodity Derivatives Market trended sharply lower from mid-January to early May 2019, along with lower international maize prices recorded over this period. The spot price of white maize declined by 24.4%, from R3 250 per ton on 17 January 2019 to R2 457 per ton on 10 May, while that of yellow maize declined by 13.8% over the same period. The decline in domestic maize prices followed upwardly revised crop estimates for the current harvest season which, together with the surplus stock of the previous season, should be more than adequate to satisfy domestic consumption. However, the destruction caused by Cyclone Idai in neighbouring countries could result in increased maize exports to these countries. Subsequently, the spot prices of both white and yellow maize increased by 17.5% and 18.0% respectively up to 7 June, along with the notable depreciation in the exchange value of the rand and higher international maize prices. By contrast, the spot price of domestic wheat continued to trend higher and increased by 5.1%, from a recent low of R4 336 per ton on 26 February 2019 to R4 558 per ton on 7 June, as the impact of currency weakness more than offset the larger intended area planted and slightly lower international wheat prices. Grain prices Rand per ton 5 500 4 500 3 500 2 500 1 500 US dollar per ton 400 350 300 250 200 150 100 2014 2015 2016 2017 2018 2019 Sources: International Grains Council and JSE 66 Quarterly Bulletin June 2019 International wheat International white maize South African wheat South African white maize
The Agbiz/IDC Agribusiness Confidence Index14 improved marginally from 42 index points in the fourth quarter of 2018 – its lowest level since 2009 – to 46 index points in the first quarter of 2019. The improvement in sentiment was welcomed, although confidence levels in the agricultural sector remained fairly depressed. The outcome of the ongoing land reform debate remains a key determinant of the long-term prospects for growth, employment and fixed investment in the agricultural sector. 14 The index is constructed quarterly by the Agricultural Business Chamber (Agbiz), with support from the Industrial Development Corporation (IDC), and reflects the perceptions of more than 25 agribusiness decision-makers on the 10 most important aspects affecting agricultural businesses. Agbiz/IDC Agribusiness Confidence Index Index 70 65 60 55 50 45 40 35 30 200920102011 2012 Source: Agbiz 2013 2014 2015 20162017 2018 2019 Turnover in commodity derivatives increased by 23.8% in the five months to May 2019 compared to the corresponding period of 2018. By contrast, turnover in equity and interest rate derivatives decreased over this period, with the value of equity derivatives still dominating overall derivatives turnover on the JSE. Derivatives turnover on the JSE, January to May 2019 Change over one year (per cent) Type of derivative Value (R billions) Equity ......................................................................................................... Warrants..................................................................................................... Commodity................................................................................................. Interest rate ................................................................................................ 1 970 0.4 299 578 -10 -2 24 -20 Source: JSE Real estate market Growth in nominal residential property prices slowed further in the first five months of 2019 and ranged between 3.3% and 4.5% across the different indicators in May – below consumer price inflation. Lacklustre house price growth is indicative of low consumer confidence, lingering uncertainty around land expropriation, high unemployment and continued pressure on households’ disposable income, amid slower wage growth in a subdued economic environment. 67 Quarterly Bulletin June 2019
Nominal house prices Percentage change over 12 months 12 10 8 6 4 2 2014 2015 2016 2017 2018 2019 Sources: First National Bank, Lightstone, Standard Bank and Stats SA 15 The HSI measures consumer sentiment among South Africans with regard to the buying, selling, investing, renting and renovating of residential property, as well as property market conditions in general. The decline in the Absa Homeowner Sentiment Index (HSI)15 to 73% in the first quarter of 2019, following an increase to 77% in the fourth quarter of 2018, reflected the weak demand in the residential property market. However, the average time that residential properties remained on the market declined slightly from 15.6 weeks in the fourth quarter of 2018 to a still high 15.3 weeks in the first quarter of 2019. Average number of weeks that residential properties remain on the market Weeks 18 17 16 15 14 13 12 11 10 2014 2015 2016 2017 2018 2019 Source: First National Bank 16 These consist of unit trusts, the Public Investment Corporation, long-and short-term insurance companies, public and private pension funds, participation bond schemes, finance companies and non-monetary public financial corporations. Non-bank financial intermediaries16 The expansion of the balance sheet of non-bank financial institutions in the first quarter of 2019 reflected the higher prices of financial assets. The value of these institutions’ consolidated assets increased by 3.7% from the final quarter of 2018 to R9.6 trillion in the first quarter of 2019, with the assets of unit trusts and insurance companies contributing the most to the growth. On a year-on-year basis, the balance sheet of non-bank financial institutions increased by 4.4% in the first quarter of 2019 compared with an increase of 5.1% in the same period of 2018. 68 Quarterly Bulletin June 2019 First National Bank Lightstone Standard Bank Headline consumer price index
Total assets of non-bank financial institutions Percentage of total assets R billions 10 000 60 50 8 000 40 6 000 30 4 000 20 2 000 10 0 0 2014 2015 2016 2017 2018 2019 Shares Cash and deposits Total assets (right-hand scale) Interest-bearing securities Other assets Source: SARB A decrease of 1.0 percentage point in the contribution of shares in the final quarter of 2018 made way for an increase of 0.7 percentage points to 55.6% of total assets in the first quarter of 2019, as both domestic and international share prices rebounded. The shareholding of unit trusts and insurance companies increased by 7.6% and 5.9% respectively from the final quarter of 2018 to the first quarter of 2019. The holding of interest-bearing securities declined slightly in the first quarter of 2019, despite higher bond prices. As a percentage of total assets, interest-bearing securities decreased by 0.2 percentage points from the final quarter of 2018 to 30.4% in the first quarter of 2019. The asset allocation of non-bank financial institutions showed a slight decline in the holdings of cash and deposits of 0.1 percentage point from the final quarter of 2018 to 5.9% of total assets in the first quarter of 2019. However, when compared to the same period of 2018, cash and deposits increased by 0.3 percentage points. The value of loans extended by these institutions declined by 0.2 percentage points from the final quarter of 2018 to 4.8% of total assets in the first quarter of 2019. Credit extended by finance companies increased by a subdued 0.7% in the first quarter of 2019, suppressed by weak consumer demand. 69 Quarterly Bulletin June 2019
Public finance17 Non-financial public sector borrowing requirement18 The preliminary non-financial public sector borrowing requirement of R191 billion in fiscal 2018/19 was R1.5 billion less than in fiscal 2017/18. The decrease resulted from a much smaller cash deficit of consolidated general government, whereas that of the non-financial public enterprises and corporations, or state-owned companies (SOCs), increased notably. The smaller deficit of consolidated general government came about as the cash surpluses of all other tiers of general government outweighed the larger cash deficit of national government. 17 Unless stated to the contrary, the year-on-year rates of increase in this section compare fiscal 2018/19 to fiscal 2017/18. Data for both fiscal years are unaudited and preliminary. 18The non-financial public sector borrowing requirement is calculated as the cash deficit/surplus of the consolidated general government as well as non-financial public enterprises and corporations. Non-financial public sector borrowing requirement R billions Level of government Fiscal 2017/18* Fiscal 2018/19* Consolidated general government ......................................................... National government.......................................................................... Extra-budgetary institutions ............................................................... Social security funds.......................................................................... Provincial governments...................................................................... Local governments ............................................................................ Non-financial public enterprises and corporations ................................. Total** ................................................................................................... As a percentage of gross domestic product ...................................... 133.1 194.0 -7.6 -11.4 -2.2 -39.7 59.6 192.7 4.1 123.2 207.5 -16.3 -11.1 -1.4 -55.5 68.0 191.2 3.9 * Deficit + surplus – ** Components may not add up to totals due to rounding off Sources: National Treasury, Stats SA and SARB As a ratio of GDP, the non-financial public sector borrowing requirement decreased to 3.9% in fiscal 2018/19, from 4.1% in the previous fiscal year. Non-financial public sector borrowing requirement R billions Per cent 10 250 200 8 150 6 100 4 50 2 0 0 2013/14 Fiscal years 2014/15 2015/16 2016/17 2017/18 2018/19 Sources: National Treasury, Stats SA and SARB 70 Quarterly Bulletin June 2019 Non-financial public enterprises and corporations Consolidated general government Percentage of GDP (right-hand scale)
The preliminary cash deficit of the non-financial SOCs increased to R68.0 billion in fiscal 2018/19, which was R8.4 billion more than in the previous fiscal year, as expenditure19 increased at a faster pace than cash receipts from operating activities. The total expenditure of non-financial SOCs increased by 5.0% year on year to R515 billion in fiscal 2018/19, while cash receipts from operating activities increased by only 3.7% to R447 billion. Operational expenses continued to drive total expenditure as net investment in non-financial assets decreased for a third consecutive year. 19 The sum of operational expenses and net investment in non-financial assets. Financial activities of non-financial public enterprises and corporations R billions 600 500 400 Total operating receipts 300 200 Net investment in non-financial assets 100 0 2013/14 Fiscal years 2014/15 2015/16 2016/17 2017/18 2018/19 * Including both operating cash payments and net investment in non-financial assets Source: SARB Non-financial SOCs’ net investment in non-financial assets decreased to R87.9 billion in fiscal 2018/19 – R7.0 billion less than a year earlier. Capital investment declined by R9.6 billion (or 9.8%) year on year to R88.6 billion in fiscal 2018/19, reflecting the weak financial condition of some non-financial SOCs. 71 Quarterly Bulletin June 2019 Box 3 Observations on the evolution of South Africa’s fiscal position1 South Africa’s current precarious fiscal position represents the outcome of both domestic and global economic developments over an extended period. At present, national government’s gross loan debt2 as a percentage of gross domestic product (GDP) is at an all-time high, and the sustainability thereof, among other factors, will require increased domestic economic activity. The increase in debt since the global financial crisis and the concomitant 2008–09 economic recession in South Africa show the effect of countercyclical domestic fiscal stimulus. The gap that opened up between total expenditure and total revenue relative to GDP was aggravated by weak domestic economic activity suppressing tax revenue. This resulted in persistent and sizable budget deficits which cumulatively added to the stock of debt. The increase in debt fed a vicious debt-service cost cycle which contributed to higher total expenditure, as reflected in the increasing gap between total and non-interest expenditure, and the budget deficit. This is also reflected by the significant and widening difference between the budget and primary3 balances. 1 National government data sourced from National Treasury. 2 Domestic rand-denominated debt accounts for more than 90% of national government’s gross loan debt. 3 The primary balance is the budget balance excluding interest payments (debt-service cost). Total expenditure*
72 Quarterly Bulletin June 2019 National government debt Percentage of GDP 70 60 50 40 30 20 10 0 Fiscal balance and economic growth Percentage change year on yearPercentage of GDP 30 12 20 8 10 4 0 0 -10 -4 -20 -8 1979/80 85/86 89/90 93/94 97/98 01/02 05/06 09/10 13/14 17/18 21/22 Fiscal years Nominal gross domestic productBudget deficit (-)/surplus (+) to GDP (right-hand scale) Real gross domestic productDownward phases of the business cycle Sources: National Treasury and Stats SA Fiscal balances, revenue and non-interest expenditure Percentage of GDP 4 2 0 -2 -4 -6 -8 35 30 25 20 15 1979/80 85/86 89/90 93/94 97/98 01/02 05/06 09/10 13/14 17/18 21/22 Non-interest expenditure Budget balance Total expenditure Primary balance Total revenue Downward phases of the business cycle Source: National Treasury Surplus Actual Forecast Deficit Actual Forecast
20 70 60 2 Budget comparable analysis of national government finance The developments in national government revenue and expenditure resulted in a cash book deficit of R233 billion in fiscal 2018/19, which was R20.8 billion more than in fiscal 2017/18 and R41.8 billion more than originally budgeted. This came about due to a further large revenue shortfall, together with below budgeted expenditure. The deficit, which was largely financed in the domestic capital market through the net issuance of government bonds, contributed to the 12.1% year-on-year increase in gross loan debt to R2 790 billion as at the end of fiscal 2018/19. 73 Quarterly Bulletin June 2019 Debt-service cost as a ratio of GDP has increased consistently from a low of 2.2% in fiscal 2009/10 to 3.7% in fiscal 2018/19. However, the sharp decline in the yield on South African rand-denominated government bonds since fiscal 1998/99 was followed by a broadly sideways movement since the global financial crisis in 2007/08, which alleviated the interest burden to some extent. This trend in the yield on government’s rand-denominated bonds partly reflected global monetary policy easing in the wake of the global financial crisis as well as lower domestic inflation. Government debt and debt-service cost Per cent 18 16 14 50 12 40 10 8 30 6 20 4 10 0 0 1979/80 85/86 89/90 93/94 97/98 01/02 05/06 09/10 13/14 17/18 21/22 Fiscal years Ten-year government bond yield Debt-service cost to GDP Gross loan debt to GDP (right-hand scale) Downward phases of the business cycle Sources: National Treasury, IRESS and JSE Going forward, the fiscal space is expected to remain constrained. Even though improved domestic economic activity is expected over the fiscal 2019/20–2021/22 forecast period, gross loan debt is still projected to increase further in the near term before stabilising at 60.2% of GDP in 2023/24. With total revenue and non-interest expenditure expected to grow at an average of 8.3% and 7.6% respectively, the primary deficit as a ratio of GDP is projected to narrow. However, debt-service cost, at just more than 10.0% of total expenditure, remains the fastest-growing spending category and is expected to increase by 10.7%, on average, and to average 3.8% as a ratio of GDP. From a historical perspective, the period before the global financial crisis was at first characterised by an increase in gross loan debt as a ratio of GDP from around 29.0% in the early 1980s to 48.2% in fiscal 1995/96. In the period following democracy in South Africa in 1994, the ratio of gross loan debt to GDP decelerated to a low of 26.0% in fiscal 2008/09, supported by strong real GDP growth and improvements in revenue collection. These developments also contributed to a narrowing of the budget deficit over time and eventually resulted in small budget surpluses in fiscal 2006/07 and fiscal 2007/08 as well as persistent primary surpluses at the time. These outcomes also reflected the decline in debt-service cost as a ratio of GDP from a peak in fiscal 1998/99. ActualForecast
National government finances in fiscal 2018/19 Originally budgeted1 Fiscal 2018/19 Actual Fiscal 2017/18 Actual Fiscal 2018/19 Percentage change2 Percentage change2 Percentage change2 R billions R billions R billions Revenue .............................. Expenditure ......................... Cash book deficit ................ Primary balance3 ................. Gross loan debt4................. 1 193 1 405 212 -50 2 490 5.2 7.6 1 272 1 505 233 -51 2 790 6.6 7.1 1 321 1 512 191 -11 2 771 10.7 7.6 11.5 12.1 11.3 1 2 3 4 2018 Budget Review Year-on-year percentage change Cash book deficit (-)/surplus (+) excluding interest As at 31 March for rand values Sources: National Treasury and SARS National government revenue increased by 6.6% year on year to R1 272 billion in fiscal 2018/19, which resulted in a revenue shortfall of R48.9 billion relative to the original 2018 Budget estimate and R13.2 billion relative to the revised 2019 Budget estimate. The revenue shortfall could be ascribed to, among other factors, weaker-than-expected domestic economic activity and higher tax refunds, as the tax authority reduced the value-added tax (VAT) credit book in fiscal 2018/19. As a ratio of GDP, revenue was 25.9% in fiscal 2018/19 – higher than the 25.4% recorded in the previous fiscal year. National government revenue in fiscal 2018/191 Originally budgeted Fiscal 2018/19 Actual Fiscal 2018/19 Revenue source Percentage change2 Percentage change2 R billions R billions Taxes on income, profits and capital gains ......... Of which: Income tax on individuals.................. Income tax on companies................. Payroll taxes ....................................................... Taxes on property............................................... Taxes on goods and services ............................. Of which: Value-added tax (VAT) net ............... Domestic ................................... Import ........................................ Refunds ...................................... General fuel levy................................ Excise duties..................................... Taxes on international trade and transactions ..... Of which: Import duties .................................... Other revenue³ ................................................... Less: SACU4 payments ...................................... Total revenue 773.0 507.3 234.1 16.9 17.3 484.6 348.1 378.6 169.5 -200.0 77.5 46.5 54.1 46.3 23.6 48.3 1 321.1 8.6 9.6 6.3 5.7 4.4 14.8 16.8 12.6 10.9 4.7 9.2 13.1 8.2 -5.8 -27.7 -13.7 10.7 738.7 493.8 214.4 17.4 15.3 460.3 324.8 378.8 175.1 -229.1 75.4 48.2 55.7 55.0 33.0 48.3 1 272.2 3.8 6.7 -2.7 8.9 -8.0 9.1 9.0 12.6 14.6 19.9 6.2 17.2 11.6 11.9 1.5 -13.7 6.6 1 2 3 4 Components may not add up to totals due to rounding off and the exclusion of unclassified items Fiscal 2018/19 compared to fiscal 2017/18 Including non-tax revenue and extraordinary receipts Southern African Customs Union Sources: National Treasury and SARS 74 Quarterly Bulletin June 2019
Taxes on income, profits and capital gains increased by only 3.8% to R739 billion in fiscal 2018/19 and contributed 58.1% to total national government revenue. Net receipts from personal income tax (PIT) contributed the most, with an increase of 6.7% to R494 billion, reflecting higher pay-as-you-earn collections, mostly from the financial intermediation, manufacturing and mining sectors. By contrast, corporate income tax (CIT) receipts declined by 2.7% to R214 billion over the same period. The contraction in CIT could be attributed to the impact of weak economic activity on corporate profits, higher-than-expected CIT refunds, and a contraction in CIT provisional tax payments in fiscal 2018/19. Both PIT and CIT collections were significantly less than their original estimates, which resulted in a shortfall of R34.3 billion in taxes on income, profits and capital gains for fiscal 2018/19. Composition of national government tax revenue in fiscal 2018/19 Per cent 4.3 Corporate income tax Import duties Taxes on goods and services increased by only 9.1% to R460 billion (36.2% of total revenue) in fiscal 2018/19 compared to the originally budgeted increase of 14.8%. However, this was notably more than the 4.9% increase in fiscal 2017/18, mainly due to the 1 percentage point increase in the VAT rate to 15%, effective from 1 April 2018. Both domestic and import VAT collections increased strongly by 12.6% and 14.6% respectively in fiscal 2018/19 compared to the originally budgeted estimates. The weaker economic activity in the retail sector amid subdued consumer demand, together with higher VAT refunds, resulted in an increase of only 9.0% in net VAT collections to R325 billion in fiscal 2018/19 compared to the budgeted increase of 16.8%. Total VAT refunds of R229 billion were 19.9% more than a year earlier and surpassed originally budgeted estimates by R29.2 billion in fiscal 2018/19. As such, overall collections from taxes on goods and services were R24.3 billion less than the R485 billion estimated in the 2018 Budget. Taxes on international trade and transactions increased by 11.6% to R55.7 billion (4.4% of total revenue) in fiscal 2018/19. The increase was mainly due to an increase in imports of electrical components, machinery and vehicles. Non-tax revenue increased by 1.4% to R33.1 billion in fiscal 2018/19 and was R8.0 billion more than originally budgeted. The increase was mainly due to inflows of R12.0 billion to the National Revenue Fund, rent on land of R9.0 billion as well as interest receipts of R6.0 billion. The budgeted R48.3 billion in fiscal 2018/19 that was earmarked for the Southern African Customs Union was transferred in four equal instalments over the period. 75 Quarterly Bulletin June 2019 4.7 3.7 5.9 38.4 25.2Personal income tax Taxes on property Value-added tax General fuel levy 16.7Excise duties 1.2Other tax revenue (including payroll taxes) Source: SARS
The 2019 Budget Review projected national government revenue of R1 403 billion for fiscal 2019/20. In the first month of fiscal 2019/20 (April 2019) total revenue collections of R73.8 billion represented an increase of 6.6% compared to the same period a year ago. National government expenditure increased by 7.1% to R1 505 billion in fiscal 2018/19. This could mainly be attributed to interest payments on government debt and equitable transfers to provinces as well as other transfers and subsidies. Notwithstanding this, total expenditure was still slightly less than the originally budgeted estimate and the revised estimate, by R7.0 billion and R5.0 billion respectively. As a ratio of GDP, total national government expenditure increased slightly from 29.9% in fiscal 2017/18 to 30.6% in fiscal 2018/19. National government expenditure in fiscal 2018/19* Originally budgeted Fiscal 2018/19 Actual Fiscal 2018/19 Expenditure item Percentage change** Percentage change** R billions R billions Voted expenditure .............................................. Of which: Transfers and subsidies ................... Current payments ........................... Payments for capital assets ............ Statutory amounts*** ......................................... Of which: Provincial equitable shares .............. Interest on debt ............................... General fuel levy .............................. Total expenditure ............................................... 814.5 569.7 226.1 14.3 697.7 470.3 180.0 12.5 1 512.2 6.0 9.4 5.0 1.6 9.7 6.6 10.7 5.8 7.6 819.3 566.1 225.6 13.6 685.8 470.3 181.8 12.5 1 505.1 6.6 9.4 3.6 -10.4 7.8 6.6 11.8 5.8 7.1 * Components may not add up to totals due to rounding off and the exclusion of unclassified items ** Fiscal 2018/19 compared to fiscal 2017/18. Note that the numbers might differ from previous editions of the Quarterly Bulletin due to the audited outcome of fiscal 2017/18. *** Including extraordinary payments Source: National Treasury Total voted expenditure by national government departments of R819 billion (54.4% of total expenditure) in fiscal 2018/19 comprised transfers and subsidies, current payments as well as payments for capital and financial assets. Transfers and subsidies, together with current payments, accounted for 97% of total voted expenditure in fiscal 2018/19. Transfers and subsidies increased by 9.4% to R566 billion due to, among other factors, increased transfers to the Departments of Social Development, Education, Cooperative Governance and Traditional Affairs, Transport and Health. Payments for financial assets of R14.0 billion exceeded the 2018 Budget estimate by R9.5 billion. This reflected the recapitalisation of SOCs, such as the R5.0 billion to South African Airways and the R2.9 billion to the South African Post Office, as well as an additional R4.3 billion to the National Development Bank. Interest paid on national government debt (debt-service costs) increased by 11.8% to R182 billion in fiscal 2018/19 and reflected the ever-increasing stock of debt. As the fastest-growing spending category, debt-service costs exceeded the original 2018 Budget projection by R2.0 billion as the borrowing requirement increased along with the underperformance of revenue collection. Equitable share transfers to provinces (31.2% of total national government expenditure) – the main source of provincial government revenue – increased by 6.6% to R470 billion in fiscal 2018/19. A total amount of R12.5 billion that was allocated to metropolitan municipalities as a share of the general fuel levy was paid in three equal instalments over the full fiscal year. The 2019 Budget Review projected national government expenditure to increase by 10.2% to R1 659 billion for fiscal 2019/20. In the first month of fiscal 2019/20, total expenditure of R137 billion represented a significant year-on-year increase of 21.6%. 76 Quarterly Bulletin June 2019
Cumulative deficit of national government R billions 250 225 Actual 2017/18 200 175 150 125 Actual 2018/19 100 75 50 25 0 A M J J A S O N D J F M Fiscal years Originally budgeted deficit of R191 billion for fiscal 2018/19, in the 2018 Budget Review Revised budget deficit of R215 billion for fiscal 2018/19, in the 2018 MTBPS Revised budget deficit of R224.5 billion for fiscal 2018/19, in the 2019 Budget Review Sources: National Treasury, SARS and SARB The difference between national government revenue and expenditure resulted in a larger cash book deficit of R233 billion in fiscal 2018/19, or R20.8 billion more than in fiscal 2017/18. Notably, the cash book deficit was more than both the originally budgeted estimate of R191 billion in the 2018 Budget and the revised estimate of R225 billion in the 2019 Budget. The larger cash book deficit was mainly due to the larger-than-anticipated revenue shortfall, even though expenditure remained contained just below the budget estimate. The 2019 Budget Review projected a national government cash book deficit of R255 billion for fiscal 2019/20. For April 2019, the net outcome of national government revenue and expenditure was a cash book deficit of R63.5 billion, which was R19.8 billion more than in the same month of the previous year. 20 The primary balance is the budget balance excluding interest payments (debt-service cost). The primary balance20 of national government was a deficit of R51.1 billion (1.0% of GDP) in fiscal 2018/19, larger than the deficit of R49.5 billion (1.1% of GDP) in fiscal 2017/18. The significantly higher primary deficit in fiscal 2018/19 compared to the original projection in the 2018 Budget of R10.9 billion (0.2% of GDP) and the revised projection of R42.3 billion (0.8% of GDP) in the 2019 Budget reflected the deterioration in the fiscal position. The cash flow deficit of national government increased from R218 billion in fiscal 2017/18 to R244 billion in fiscal 2018/19. After accounting for the revaluation of foreign debt at redemption and accrual adjustments, the net borrowing requirement of R171 billion in the period under review was R11.1 billion less than in the previous fiscal year. Government financed the lower net borrowing requirement, mostly in the domestic capital market, through the net issuance of domestic bonds. Total net financing was R11.1 billion less than in the previous fiscal year. The net issuance of domestic bonds, Treasury bills and short-term loans from the Corporation for Public Deposits (CPD), as well as foreign bonds and loans were R13.1 billion, R19.3 billion and R7.9 billion less than in the previous fiscal year respectively. The funding activities of national government’s net borrowing requirement increased its overall available cash balances by only R2.3 billion in fiscal 2018/19. 77 Quarterly Bulletin June 2019
National government financing R billions Originally budgeted1 Fiscal 2018/19 Actual Actual Item or instrument Fiscal 2017/18 Fiscal 2018/19 Cash book deficit .................................................................. 212.1 163.1 191.1 Cash flow deficit2 .................................................................. Plus: Cost/profit on revaluation of foreign debt at redemption3 ....................................................... Accrual adjustments ...................................................... Net borrowing requirement ................................................... Treasury bills and short-term loans4 ........................................ Domestic bonds4 .................................................................... Foreign bonds and loans4 ....................................................... Change in available cash balances5 ........................................ Total net financing6 ................................................................ 218.3 243.6 ... 2.1 38.0 182.4 33.4 148.6 31.9 -31.5 182.4 0.8 73.1 171.3 14.1 135.6 24.0 -2.3 171.3 0.8 … 191.9 14.2 159.9 36.8 -19.0 191.9 1 2 3 4 5 6 2018 Budget Review The cash flow deficit includes extraordinary receipts and payments, and differs from the cash book deficit. Cost + profit – Net issuance + net redemption – Increase – decrease + Components may not add up to totals due to rounding off ... Not available Sources: National Treasury and SARB National government’s gross loan debt (domestic and foreign currency-denominated debt) increased by R300 billion in the fiscal year to R2 790 billion (56.7% of GDP) as at 31 March 2019. This significant increase in the outstanding value of gross loan debt predominantly reflected an increase in domestic debt (89.6% of total gross loan debt). Foreign currency-denominated debt also increased in the period under review, mostly due to exchange rate revaluation effects as the exchange value of the rand depreciated. Total gross loan debt of national government R billions Per cent 60 3 500 3 000 50 2 500 40 2 000 30 1 500 20 1 000 10 500 0 0 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 As at 31 March of each fiscal year Originally budgeted Actual Actual: debt-to-GDP ratio (right-hand scale) Debt-to-GDP ratio estimate: 2019 Budget (right-hand scale) * As at 30 April 2019 Sources: National Treasury, SARB and Stats SA 78 Quarterly Bulletin June 2019 *
Gross loan debt was originally projected at R2 771 billion (55.1% of GDP) for fiscal 2018/19 in the 2018 Budget Review, which was 11.3% more than as at 31 March 2018. However, the 2019 Budget Review revised gross loan debt to R2 814 billion (55.6% of GDP), which was higher than the original estimate in the 2018 Budget. Over the medium term, the gross debt-to-GDP ratio was expected to increase further before stabilising at 60.2% in 2023/24. The 2019 Budget Review projected national government’s gross loan debt to increase by R253 billion year on year to R3 043 billion as at the end of fiscal 2019/20. As at 30 April 2019, gross loan debt had already increased to R2 835 billion, from R2 790 in March 2019. National government’s exposure to contingent liabilities of R494 billion (10.1% of GDP) as at 31 December 2018 represented a notable increase from R103 billion (4.3% of GDP) a decade ago, as at 31 December 2008.21 21 See Box 4 for a comprehensive analysis of national government’s exposure to contingent liabilities. 800 200 2012/13 15/16 17/18 19/20 21/22 2012/13 15/16 17/18 19/20 21/22 79 Quarterly Bulletin June 2019 Box 4 National government exposure to contingent liabilities National government contingent liabilities1 consist of exposure to guarantees2 and other obligations3 extended to state-owned companies (SOCs), independent power producers (IPPs), public–private partnerships (PPPs)4 and other public sector institutions. Contingent liabilities exclude national government’s provision for the recapitalisation of multilateral institutions and other provisions.5 Notwithstanding a slight decline in the projected ratio of guarantees to gross domestic product (GDP), total contingent liabilities are expected to reach R1.0 trillion by the end of fiscal 2021/22 due to an increase in other obligations. SOCs, Eskom in particular, and IPPs account for most of the guarantees, with the Road Accident Fund (RAF) dominating other obligations, which are expected to increase further. Contingent liabilities of national Government exposure to financial government guarantees R billionsR billions 1 200 700 1 000 600 500 400 600 300 400 200 100 0 0 Fiscal yearsFiscal years Financial guarantee exposureState-owned companies Other obligationsIndependent power producers Public-private partnerships Other public sector institutions* * Including agricultural cooperatives, former regional authorities, irrigation boards, Komati Basin Water Authority and housing loans to employees Source: National Treasury 1 Contingent liabilities represent the exposure of national government to guarantees and other obligations that could change into fiscal obligations and result in expenditure upon the occurrence of a specific event. 2 The exposure to guarantees includes amounts drawn against financial guarantees and accrued interest. 3 For a full list of institutions with guarantees and other obligations, see pages 216–217 of the 2019 Budget Review, available at http://www.treasury.gov.za/documents/national%20budget/2019/review/FullBR.pdf. 4 A PPP relates to a contractual agreement according to which a private entity performs a government function for a fee, with the associated risks, in terms of predetermined criteria. 5 The provision for multilateral institutions represents the unpaid portion of government’s subscription, and other provisions represent liabilities with uncertain payment dates or amounts. ActualForecast ActualForecast
2012/13 15/16 17/18 19/20 21/22 2012/13 15/16 17/18 19/20 21/22 80 Quarterly Bulletin June 2019 Eskom, including its power-purchase agreements with IPPs, accounts for the largest part of government guarantees. Other contingent liabilities of government include obligations of the RAF, post-retirement medical assistance to government employees, the net underwriting exposure of the Export Credit Insurance Corporation of South Africa, the exposure of the Unemployment Insurance Fund, and other claims such as those against government departments. The value of contingent liabilities of R880 billion as at 31 March 20196 is likely to increase to R1.0 trillion by the end of fiscal 2021/22. However, the contribution of exposure to guarantees is expected to decline from 60% to 52% over the period, while that of other obligations is expected to increase. In fiscal 2018/19, SOCs accounted for most of the exposure to guarantees at 70%, followed by IPPs at 28%. Going forward, guarantees to SOCs are expected to level off and that of IPPs are expected to decrease in fiscal 2021/22. In fiscal 2018/19, the RAF dominated the composition of other obligations at 62%, followed by post-retirement medical obligations at 20%. The RAF is expected to continue to be the main driver of increased exposure to other obligations over the forecast period. Other obligations Financial guarantees to state-owned companies R billionsR billions 600 450 400 500 350 400 300 250 300 200 200 150 100 100 50 0 0 Fiscal yearsFiscal years Road Accident FundEskom Post-retirement medical assistanceSouth African National Roads Agency Export Credit Insurance CorporationTrans-Caledon Tunnel Authority of SASouth African Airways Unemployment Insurance FundDevelopment Bank of Southern Africa Other*Transnet Denel Other * Including claims against government departments Source: National Treasury Within guarantees to SOCs, Eskom accounted for the largest exposure of 79% in fiscal 2018/19, which is expected to decrease only marginally to 78% in fiscal 2021/22. The next largest exposures were the South African National Roads Agency and the Trans-Caledon Tunnel Authority at less than 10% each, but with the latter doubling over the forecast horizon. Growth in exposure to SOC guarantees is projected to slow notably in fiscal 2019/20 from the 15.9% recorded in fiscal 2018/19, and to contract slightly in fiscal 2020/21, mostly driven by the expected positive evolution of guarantees to Eskom. 6 For the underlying data, see pages 216–217 of the 2019 Budget Review, available at http://www.treasury.gov.za/ documents/national%20budget/2019/review/FullBR.pdf, and page S–55 of this Quarterly Bulletin. ActualForecast ActualForecast
20 Government’s significant net issuance of domestic debt (marketable and non-marketable) of R227 billion in fiscal 2018/19 increased the outstanding stock of this debt to R2 498 billion as at 31 March 2019, broadly in line with both the original and revised budget projections for fiscal 2018/19. Domestic marketable debt increased by R226 billion to R2 469 billion as at 31 March 2019 from a year earlier. The net issuance of domestic marketable bonds accounted for 93.8% of this increase, with the remainder attributed to Treasury bills. Non-marketable debt, which mostly comprised loans from the CPD, remained broadly unchanged at R29.0 billion between 31 March 2018 and 31 March 2019. Gross domestic debt was originally estimated at R2 502 billion (49.8% of GDP) in the 2018 Budget Review for fiscal 2018/19, but was revised lower to R2 494 billion (49.3% of GDP) in the 2019 Budget Review. Domestic debt of national government R billions 3 000 2 500 2 000 1 500 1 000 500 0 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 As at 31 March of each fiscal year Originally budgeted Actual Source: National Treasury 81 Quarterly Bulletin June 2019 Growth in financial guarantee National government gross loan exposure to state-owned debt and exposure to guarantees companies Percentage change over one yearPercentage of GDP 40 70 35 60 30 50 25 20 40 15 30 10 5 0 10 -5 0 2012/13 15/16 17/18 19/20 21/22 2012/13 15/16 17/18 19/20 21/22 Fiscal yearsFiscal years EskomGross loan debt TotalGuarantee exposure Source: National Treasury The gross national government debt and all guarantees relative to GDP were 52.7% and 9.6% respectively in fiscal 2017/18. The 2019 Budget Review projected the former to increase to 58.9% of GDP and the latter to decline to 8.5% of GDP in fiscal 2021/22. ActualForecast ActualForecast
National government’s foreign currency-denominated debt (marketable and non-marketable) increased by R73.5 billion from 31 March 2018 to R291 billion as at 31 March 2019. This increase reflected both exchange rate revaluation effects from the depreciation in the exchange value of the rand against major trading partner currencies and net foreign bond issuances. National government issued a US$2.0 billion bond in May 2018, which raised a rand equivalent of R25.2 billion. National government’s total foreign currency-denominated debt consisted almost entirely of marketable debt at the end of fiscal 2018/19, as non-marketable debt continued to dwindle. Foreign marketable debt of R289 billion as at 31 March 2019 was R75.1 billion more compared to 31 March 2018. By contrast, non-marketable foreign debt of only R2.0 billion as at 31 March 2019 was R1.6 billion less than a year earlier. Foreign currency-denominated debt of national government R billions 360 300 240 180 120 60 0 US dollar Euro 360 300 240 180 120 60 0 Adjusted for revaluation Before revaluation 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 As at 31 March of each fiscal year Sources: National Treasury and SARB National government’s foreign currency-denominated debt of R291 billion after accounting for revaluation effects as at 31 March 2019 was R72.0 billion more than the R219 billion before adjusting for exchange rate movements. US dollar-denominated debt of R274 billion (94.0% of the total stock of foreign currency-denominated debt) as at 31 March 2019 was R72.8 billion more than a year earlier. The average outstanding maturity of foreign marketable bonds declined from 132 months as at 31 March 2018 to 129 months as at 31 March 2019. The 2019 Budget Review revised the stock of foreign currency-denominated debt higher to R320 billion (6.3% of GDP) as at the end of March 2019 relative to the original estimate of R268 billion (5.3% of GDP) in the 2018 Budget Review. The revision mainly accounted for exchange rate revaluation effects, owing to the weakening of the exchange value of the rand. The 2019 Budget further projected national government’s gross foreign debt to average R332 billion over the medium term. 82 Quarterly Bulletin June 2019 Japanese yen Other
Note on the flow of funds in South Africa’s national financial account for the year 2018 by S Madonsela and B Khoza1 1The views expressed are those of the authors and do not necessarily reflect the views of the South African Reserve Bank (SARB). The SARB would like to express its sincere appreciation to all the reporting organisations – government departments as well as financial and other public and private sector institutions – for their cooperation in furnishing the data used for the compilation of South Africa’s financial accounts. Introduction The national financial account shows the flow of funds among all institutional sectors of the South African economy for both real and financial transactions. In 2018 these flows occurred in a domestic economic environment of lower inflation and a technical recession in the first half of the year, along with electricity-supply disruptions, a weaker exchange value of the rand, a wider current account deficit, an increase in government debt, and some non-financial public business enterprises experiencing governance and financial challenges. The financial flows and changes in sectoral financial instrument positions described in this note reflect the impact of these developments. The quarterly flow-of-funds accounts for 2018 are appended to this note and the annual summary is published on pages S–48 and S–49 of this Quarterly Bulletin. Sectoral financing balances Domestic economic growth remained weak and slowed in 2018 as the downward phase of the business cycle, which commenced in December 2013, continued. Gross saving in the South African economy decreased from R757 billion in 2017 to R701 billion in 2018, and gross capital formation decreased by 0.1% to R874 billion in 2018 amid weak business confidence. Non-financial private business enterprises played a key role in the economy in 2018, both as savers and investors, and contributed 52.8% to gross saving and 54.9% to gross capital formation. The table below summarises the economy’s institutional financing balances for 2017 and 2018. Financing balances,1 2017 and 2018 R millions Surplus units (+) deficit units (-) 1. A positive amount reflects a net lending position and, by implication, the net acquisition of financial assets, whereas a negative amount reflects a net borrowing position and, by implication, the net incurrence of financial liabilities. Gross capital formation consists of fixed capital formation and changes in inventories, before providing for consumption (depreciation) of fixed capital. Net lending/borrowing equals gross saving plus net capital transfers less gross capital formation. A positive amount reflects a surplus for the rest of the world and is therefore a deficit on South Africa’s current account of the balance of payments. A negative amount reflects a deficit for the rest of the world and a surplus on South Africa’s current account of the balance of payments. This includes unincorporated business enterprises and non-profit institutions serving households. 2. 3. 4. 5. Source: SARB 83 Quarterly Bulletin June 2019 Foreign sector4 .......... Financial intermediaries ............. General government ... Non-financial business enterprises Public ..................... Private .................... Households5 ............... Total ........................... 2017 2018 Net Gross Net lending Gross capital capital (+)/net saving transfers formation2 borrowing (-)3 Net Gross Net lending Gross capital capital (+)/net saving transfers formation borrowing (-) 118 234 - 246 - 117 988 99 781 - 19 645 80 136 7 218 -37 323 147 107 -177 212 55 258 17 789 146 477 -73 430 522 054 2 038 464 457 59 635 72 617 17 742 97 476 -7 117 875 162 0 875 162 0 172 961 - 236 - 172 725 116 818 - 23 288 93 530 -1 123 -17 053 145 767 -163 943 56 926 1 127 410 -70 483 461 713 2 235 479 911 -15 963 67 101 15 053 98 020 -15 866 874 396 0 874 396 0
The inter-sectoral flow of funds among the main institutional sectors in the South African economy is presented in the diagram below. Financial intermediaries were the only domestic sector with a surplus position in 2018. General government sourced R17 billion from financial intermediaries, R25 billion from the foreign sector, R38 billion from non-financial business enterprises and R69 billion from households to finance the R164 billion deficit. The shortfall of non-financial business enterprises was financed through funding from both financial intermediaries and the foreign sector. Households sourced R180 billion from non-financial business enterprises and, in turn, financial intermediaries received R95 billion from households. Net inter-sectoral flows of funds, 2018* R billions 39 * The numbers may not balance perfectly due to rounding off. The numbers inside the boxes represent the net lending (+) or borrowing (-) positions of the sectors, and those outside the boxes illustrate inter-sectoral flows of funds and the direction of flows. To calculate the net lending or net borrowing position of each sector, inflows are treated as negatives and outflows as positives. Source: SARB 2The net flows reflect the net acquisition of financial assets. The figure below shows the net flows2 of the main financial instrument categories over the past 11 years. The contribution of cash and deposits as well as fixed-interest securities did not change much from 2017 to 2018, contributing 18.3% and 14.3% respectively to total intermediation in 2018. However, the contribution of credit extension increased from only 7.9% in 2017 to 16.4% in 2018, while that of shares decreased from 21.2% to 5.4% over the same period. 84 Quarterly Bulletin June 2019 t 180 General governmen -164 Foreign sector 173 108 25 0 95 Households -16 69 Financial intermediaries 94 17 Non-financial business enterprises -86 38 219
Contribution of financial instruments to intermediation Per cent 100 80 60 40 20 0 2008 2010 2012 2014 Fixed-interest securities Credit extension 2016 2018 Cash and deposits Shares Other Source: SARB Sectoral analysis Developments in the main institutional sectors are discussed below, with a focus on net financing positions and the utilisation of financial instruments to allocate surplus funds and to source funding. The outcomes per financial instrument reflect risk-return assessments, funding costs, macroeconomic conditions and the regulatory framework, among other factors. 3Financial derivatives data have been published explicitly for the flow of funds since 2011. Foreign sector Non-residents’ net acquisition of financial assets reflected a marked disposal of South African assets in 2016, owing to a significant change in financial derivative3 exposure. Non-residents acquired net financial assets of R118 billion in 2018. This included the net placement of funds of R28.4 billion in long-term government bonds, R50.1 billion in shares, and loans of R173 billion. South Africa received net financial investment4 of R173 billion from non-residents in 2018 compared to the R118 billion received in 2017. The decrease in the acquisition of domestic securities by the rest of the world reflected an increase in risk aversion, uncertainty about domestic economic growth prospects, higher United States interest rates and escalating global trade tensions. 4This is the difference between non-residents’ net acquisition of financial assets and the net incurrence of financial liabilities. Non-resident net funding of South Africa R billions 200 100 0 -100 -200 -300 -400 -500 2008 Source: SARB 2010 2012 2014 2016 2018 85 Quarterly Bulletin June 2019 Net acquisition of financial assets Financial derivatives Loans Long-term government bonds Shares
Financial intermediaries5 Total funds6 intermediated between surplus and deficit units through financial intermediaries increased from R434 billion in 2017 to R744 billion in 2018. Financial intermediaries’ funding in 2018 consisted of, among others, deposits of R290 billion – mainly from households, general government and non-financial private business enterprises – funds placed with other financial institutions of R122 billion, and interest in retirement and life funds of R143 billion. 5 Financial intermediaries comprise the monetary authority, banks and non-bank financial institutions (excluding the Public Investment Corporation). 6 This is calculated as the net acquisition of financial assets plus gross capital formation, or the net incurrence of financial liabilities plus net saving plus the consumption of fixed capital. Net acquisition of financial assets through selected instruments by financial intermediaries R billions 450 350 250 150 50 -50 2010 2008 Source: SARB 2012 2014 2016 2018 7 Fixed-interest securities include Treasury bills, other bills, short-term government bonds, long-term government bonds, securities of local governments, securities of public enterprises, and other loan stock and preference shares. Intermediation through financial intermediaries’ net acquisition of financial assets in 2018 included the acquisition of fixed-interest securities,7 which was higher at R279 billion, and credit extension8 of R199 billion, along with subdued net purchases of shares of R1.1 billion amid lower domestic share prices. Bank loans and advances as well as mortgage loans contributed R141 billion and R91.4 billion respectively to credit extension in 2018. General government The October 2018 Medium Term Budget Policy Statement highlighted the impact of weak economic activity and revenue shortfalls on fiscal outcomes. In spite of this, general government’s borrowing requirement narrowed from R177 billion in 2017 to R164 billion in 2018. In 2018 government financed the borrowing requirement through the net incurrence of financial liabilities, such as the net issuance of long-term bonds of R243 billion, of which R25.2 billion was raised in international bond markets, and Treasury bills of R8.6 billion. A further R5.4 billion was sourced through loans. The institutional sectors that invested in long-term government bonds included banks and non-bank financial intermediaries, which increased their holdings by R78.3 billion and R98.2 billion respectively. By contrast, non-residents’ appetite for domestic long-term government bonds moderated. The general government sector’s net acquisition of financial assets reflected an increase in deposit holdings of R62.3 billion in 2018. 8 This includes bank loans and advances, trade credit and short-term loans, long-term loans and mortgage loans. 86 Quarterly Bulletin June 2019 Credit extension Shares Fixed-interest securities
Net purchases of long-term government bonds by selected sectors and net issuance by general government R billions 250 200 150 100 50 0 -50 2008 Source: SARB 2010 2012 2014 2016 2018 Non-financial public and private business enterprises The gross saving of non-financial public and private corporate business enterprises decreased markedly from R577 billion in 2017 to R519 billion in 2018, mainly due to the decline in savings of private business enterprises. The sector’s gross capital formation also decreased, but by much less, from R611 billion in 2017 to R607 billion in 2018, with private business enterprises contributing 79.0%. This reflected low business confidence and caution in an uncertain business and political environment. The larger shortfall between savings and investment resulted in a bigger net borrowing requirement of R86.4 billion in 2018, to which public business enterprises contributed 81.5% amid funding and governance challenges. Funds raised by non-financial business enterprises through the net issuance of fixed-interest securities decreased from R71.3 billion in 2017 to R55.6 billion in 2018, while loans incurred increased from R99.4 billion to R110 billion over the same period. Non-financial business enterprises’ holdings of cash and deposits increased by R12.0 billion in 2017 and by a further R50.5 in 2018. Non-financial corporate business enterprises R billions 700 Gross capital formation Net lending and borrowing 600 500 400 300 200 100 0 -100 -200 2008 Source: SARB 2010 2012 2014 2016 2018 . 87 Quarterly Bulletin June 2019 Gross saving Foreign sector Banks Non-bank financial intermediaries Long-term government bond net issuance
Households Gross saving by the household sector declined from R72.6 billion in 2017 to R67.1 billion in 2018, while households received more loans of R88.9 billion in 2018. This reflected the high level of unemployment and slow income growth. Households’ net acquisition of financial assets decreased by 61.3% in 2018, with cash and deposits receding from R95.0 billion in 2017 to R81.6 billion in 2018, and interest in retirement and life funds decreasing marginally from R120 billion to R119 billion over the same period. In addition, funds placed with other financial institutions for the purchase of units in collective investment schemes also switched from net purchases of R48.3 billion in 2017 to net sales of R1.8 billion in 2018. The household sector’s net borrowing position widened from R7.1 billion in 2017 to R15.9 billion in 2018. Household lending and borrowing R billions 250 200 150 100 50 0 -50 2008 Source: SARB 2010 2012 2014 2016 2018 Summary and conclusion In 2018 financial intermediation in South Africa increased despite subdued domestic economic activity and low income growth. The main highlights are: – An increase in foreign investor risk aversion contributed to a decrease in foreign investors’ holdings of domestic shares and long-term government bonds. Financial intermediation through fixed-interest securities increased, whereas net purchases of shares decreased. General government’s net issuance of long-term government bonds increased to fund the net borrowing requirement. Non-financial business enterprises’ gross capital formation decreased. Households’ demand for credit increased. – – – – 88 Quarterly Bulletin June 2019 Interest in retirement and life funds Cash and deposits Loans Funds placed with other financial institutions
References Monyela, C. 2016. ‘A note on flows of funds in South Africa’s national financial accounts for the year 2015’. Quarterly Bulletin, No. 280, June. Pretoria: South African Reserve Bank: 86–91. Monyela, C and Madonsela, S. 2017. ‘A note on flows of funds in South Africa’s national financial accounts for the year 2016’. Quarterly Bulletin, No. 284, June. Pretoria: South African Reserve Bank: 85–90. National Treasury. 2019. Budget Review 2019. February. Pretoria: National Treasury. South African Reserve Bank Reserve Bank. Quarterly Bulletin, various issues. Pretoria: South African 89 Quarterly Bulletin June 2019
National financial account Flow of funds for the first quarter 20181 R millions S = Sources, i.e. net increase in liabilities at transaction value. U = Uses, i.e. net increase in assets at transaction value. KB230 1. A negative amount reflects a decrease in that item. In the case of liabilities (sources) it denotes a reduction in the available sources of funds and in the case of assets (uses) it indicates an additional source of funds. Including mutual banks and the Postbank. Before April 2005 the Public Investment Commissioners. As taken from the national income (and production) accounts. Namely deposits with the South African Reserve Bank (including coin liabilities), Corporation for Public Deposits, banks, the Land Bank, mutual banks and the Postbank. Non-marketable bonds and other Treasury bills. Members’ interest in the reserves of retirement and all insurance funds. 2. 3. 4. 5. 6. 7. 90 Quarterly Bulletin June 2019 Sectors Transaction items Foreign sector Financial intermediaries Monetary authority Other monetary institutions2 Public Investment Corporation3 Insurers and retirement funds Other financial institutions S U S U S U S U S U S U 1. Net saving4.................................................... 2. Consumption of fixed capital4 ........................ 3. Capital transfers ............................................ 4. Gross capital formation4 ................................ 72 744 44 105 -104 138 356 897 3 756 4 893 97 7 7 12 098 176 169 7 488 1 063 573 5. Net lending (+)/net borrowing (-) (S) ............... 6. Net financial investment (+) or (-) (U) .............. 72 683 72 683 -322 -322 -240 -240 97 97 12 105 12 105 7 978 7 978 7. Net incurrence of financial liabilities (Total S 9 – 32) .............................................. 8. Net acquisition of financial assets (Total U 9 – 32) .............................................. -10 448 62 235 -17 374 -17 696 -25 769 -26 009 9 833 9 930 8 324 20 429 1 052 9 030 9. Gold and other foreign reserves .................... 10. Cash and demand monetary deposits5 ......... 11. Short/Medium-term monetary deposits5........ 12. Long-term monetary deposits5 ...................... 13. Funds placed with other financial institutions . 14. Funds placed with other institutions .............. 15. Treasury bills ................................................. 16. Other bills...................................................... 17. Bank loans and advances ............................. 18. Trade credit and short-term loans.................. 19. Short-term government bonds ...................... 20. Long-term government bonds ...................... 21. Non-marketable debt of central government6 22. Securities of local governments..................... 23. Securities of public enterprises...................... 24. Other loan stock and preference shares ........ 25. Ordinary shares............................................. 26. Foreign branch/head office balances ............. 27. Long-term loans............................................ 28. Mortgage loans ............................................. 29. Interest in retirement and life funds7 ............... 30. Financial derivatives ...................................... 31. Amounts receivable/payable ......................... 32. Other liabilities/assets.................................... 33. Balancing item .............................................. -14 571 -842 -26 275 -9 518 -11 399 23 652 36 503 989 1 255 -1 520 33 842 15 801 -197 -53 339 720 -5 549 -678 8 278 -3 179 72 19 813 46 708 1 022 -846 48 160 -294 1 507 -59 570 1 242 -3 580 340 -282 200 -13 080 351 -1 323 -14 571 17 376 16 514 502 532 -6 006 -3 209 -22 610 1 815 -2 017 -2 98 -6 118 -14 530 2 515 56 112 546 -3 224 -43 470 -261 208 1 725 -71 702 45 984 328 -2 210 -5 242 -26 002 -20 368 -1 295 82 204 -12 487 -4 843 -1 591 414 522 -3 400 956 25 342 -689 -25 572 5 692 -37 330 -110 9 833 5 044 1 368 3 482 4 154 -5 998 200 208 3 913 26 46 -1 064 -3 109 1 660 -5 998 -1 -1 462 -501 392 119 -2 40 996 1 927 -2 -27 108 -36 4 130 -1 610 2 263 1 009 8 463 846 37 -32 7 558 6 641 2 169 7 690 1 561 -43 334 -8 132 -655 1 397 17 388 12 780 260 10 739 -15 18 839 -981 181 -2 8 488 126 1 102 213 -37 479 -159 -4 026 -21 824 39 346 -842 3 425 -673 -270 1 850 3 727 2 249 145 -340 -5 195 -41 506 4 499 1 502 2 304 -6 159 30 613 205
National financial account (continued) Flow of funds for the first quarter 20181 R millions and S = Sources, i.e. net increase in liabilities at transaction value. U = Uses, i.e. net increase in assets at transaction value. KB231 1. A negative amount reflects a decrease in that item. In the case of liabilities (sources) it denotes a reduction in the available sources of funds and in the case of assets (uses) it indicates an additional source of funds. Including mutual banks and the Postbank. Before April 2005 the Public Investment Commissioners. As taken from the national income (and production) accounts. Namely deposits with the South African Reserve Bank (including coin liabilities), Corporation for Public Deposits, banks, the Land Bank, mutual banks and the Postbank. Non-marketable bonds and other Treasury bills. Members’ interest in the reserves of retirement and all insurance funds. 2. 3. 4. 5. 6. 7. 91 Quarterly Bulletin June 2019 General government Corporate business enterprises Households, etc. Total Sectors Transaction items Central provincial governments Local governments Public sector Private sector S U S U S U S U S U S U 3 612 16 560 21 247 20 468 - 9 680 6 332 15 053 16 273 - 12 399 25 059 1 31 136 16 089 94 632 739 16 112 467 -44 354 17 207 5 559 28 25 076 46 488 164 930 21 396 21 396 211 418 1. Net saving4 2. Consumption of fixed capital4 3. Capital transfers 4. Gross capital formation4 -21 543 -21 543 -4 568 -4 568 -18 475 -18 475 -1 023 -1 023 -46 692 -46 692 5. Net lending (+)/net borrowing (-) (S) 6. Net financial investment (+) or (-) (U) 1 081 -20 462 11 001 6 433 28 971 10 496 40 291 39 268 18 909 -27 783 65 871 65 871 7. Net incurrence of financial liabilities (Total S 9 – 32) 8. Net acquisition of financial assets (Total U 9 – 32) -11 607 1 271 -22 178 8 465 54 910 92 - 2 -18 470 -11 300 -100 -18 929 -18 890 3 495 5 209 184 -2 217 4 879 -13 080 18 887 -672 35 -101 47 16 7 530 3 859 287 4 388 12 788 -2 126 13 27 -1 -11 1 -4 186 -4 345 -115 -3 447 -489 3 479 12 998 7 298 2 459 -10 644 -6 910 9 373 5 642 9 159 53 -3 074 842 -435 702 4 457 371 531 6 618 -1 727 1 561 488 162 5 079 2 373 18 300 -36 732 -4 987 -35 508 -475 18 411 26 802 25 956 20 670 402 -16 399 -3 245 5 990 8 272 -2 697 -1 462 -1 834 -7 645 -2 855 -1 117 26 592 16 142 8 507 -2 669 30 740 -17 425 373 17 011 9 624 3 7 836 -230 -15 335 -3 732 8 294 6 774 -1 688 239 -27 101 -4 92 -6 - 24 31 671 -42 311 13 -14 571 -18 110 2 515 56 112 6 450 -17 361 -21 125 -8 984 78 995 -45 945 8 465 55 899 92 -101 8 934 - 4 812 -11 710 5 716 26 190 40 996 -85 837 21 710 -18 422 775 -14 571 -18 110 2 515 56 112 6 450 -17 361 -21 125 -8 984 78 995 -45 945 8 465 55 899 92 -101 8 934 -4 812 -11 710 5 716 26 190 40 996 -85 837 21 710 -18 422 775 9. Gold and other foreign reserves 10. Cash and demand monetary deposits5 11. Short/Medium-term monetary deposits5 12. Long-term monetary deposits5 13. Funds placed with other financial institutions 14. Funds placed with other institutions 15. Treasury bills 16. Other bills 17. Bank loans and advances 18. Trade credit and short-term loans 19. Short-term government bonds 20. Long-term government bonds 21. Non-marketable debt of central government6 22. Securities of local governments 23. Securities of public enterprises 24. Other loan stock and preference shares 25. Ordinary shares 26. Foreign branch/head office balances 27. Long-term loans 28. Mortgage loans 29. Interest in retirement and life funds7 30. Financial derivatives 31. Amounts receivable/payable 32. Other liabilities/assets 33. Balancing item
National financial account Flow of funds for the second quarter 20181 R millions S = Sources, i.e. net increase in liabilities at transaction value. U = Uses, i.e. net increase in assets at transaction value. KB230 1. A negative amount reflects a decrease in that item. In the case of liabilities (sources) it denotes a reduction in the available sources of funds and in the case of assets (uses) it indicates an additional source of funds. Including mutual banks and the Postbank. Before April 2005 the Public Investment Commissioners. As taken from the national income (and production) accounts. Namely deposits with the South African Reserve Bank (including coin liabilities), Corporation for Public Deposits, banks, the Land Bank, mutual banks and the Postbank. Non-marketable bonds and other Treasury bills. Members’ interest in the reserves of retirement and all insurance funds. 2. 3. 4. 5. 6. 7. 92 Quarterly Bulletin June 2019 Sectors Transaction items Foreign sector Financial intermediaries Monetary authority Other monetary institutions2 Public Investment Corporation3 Insurers and retirement funds Other financial institutions S U S U S U S U S U S U 1. Net saving4.................................................... 2. Consumption of fixed capital4 ........................ 3. Capital transfers ............................................ 4. Gross capital formation4 ................................ 24 596 45 104 -365 139 75 5 641 3 757 3 503 105 7 7 916 180 210 8 760 1 075 1 276 5. Net lending (+)/net borrowing (-) (S) ............... 6. Net financial investment (+) or (-) (U) .............. 24 537 24 537 -301 -301 5 895 5 895 105 105 886 886 8 559 8 559 7. Net incurrence of financial liabilities (Total S 9 – 32) .............................................. 8. Net acquisition of financial assets (Total U 9 – 32) .............................................. -4 376 20 161 95 902 95 601 116 667 122 562 49 583 49 688 52 795 53 681 47 422 55 981 9. Gold and other foreign reserves .................... 10. Cash and demand monetary deposits5 ......... 11. Short/Medium-term monetary deposits5........ 12. Long-term monetary deposits5 ...................... 13. Funds placed with other financial institutions . 14. Funds placed with other institutions .............. 15. Treasury bills ................................................. 16. Other bills...................................................... 17. Bank loans and advances ............................. 18. Trade credit and short-term loans.................. 19. Short-term government bonds ...................... 20. Long-term government bonds ...................... 21. Non-marketable debt of central government6 22. Securities of local governments..................... 23. Securities of public enterprises...................... 24. Other loan stock and preference shares ........ 25. Ordinary shares............................................. 26. Foreign branch/head office balances ............. 27. Long-term loans............................................ 28. Mortgage loans ............................................. 29. Interest in retirement and life funds7 ............... 30. Financial derivatives ...................................... 31. Amounts receivable/payable ......................... 32. Other liabilities/assets.................................... 33. Balancing item .............................................. 23 537 -1 400 -11 282 6 896 54 682 -8 912 -16 430 -527 1 628 8 747 6 752 17 522 66 -50 414 95 - 35 336 8 158 18 326 12 774 257 -13 175 -3 421 -636 2 331 6 960 17 765 13 141 9 687 - 45 459 -6 547 38 996 - 234 3 664 61 059 - 271 -7 312 23 537 -13 000 7 011 -502 -114 52 024 -12 8 605 -287 7 76 18 256 -2 870 -29 420 94 056 -266 3 036 23 943 3 943 1 113 -208 71 406 - 48 049 -17 1 360 1 268 14 268 10 138 918 6 844 -15 232 7 845 25 201 761 4 332 3 283 -1 324 18 457 655 -19 698 34 020 29 349 117 49 583 -2 490 -7 199 6 310 9 337 18 212 4 892 -159 19 730 -144 - 364 -2 098 791 2 870 18 212 5 727 -802 -19 -1 115 -2 26 401 2 480 -14 811 16 543 181 -2 794 -4 093 5 385 -126 29 792 -180 202 -51 -15 087 -9 063 -415 -7 758 5 557 68 432 1 325 -465 -1 262 13 584 -29 227 -75 14 317 1 036 -7 328 -1 898 -1 880 2 426 6 398 118 139 33 821 273 -10 052 -63 085 53 344 -1 400 7 321 -463 7 434 592 5 473 21 183 157 506 -3 589 61 727 348 1 425 449 6 793 -32 136 -46
National financial account (continued) Flow of funds for the second quarter 20181 R millions and S = Sources, i.e. net increase in liabilities at transaction value. U = Uses, i.e. net increase in assets at transaction value. KB231 1. A negative amount reflects a decrease in that item. In the case of liabilities (sources) it denotes a reduction in the available sources of funds and in the case of assets (uses) it indicates an additional source of funds. Including mutual banks and the Postbank. Before April 2005 the Public Investment Commissioners. As taken from the national income (and production) accounts. Namely deposits with the South African Reserve Bank (including coin liabilities), Corporation for Public Deposits, banks, the Land Bank, mutual banks and the Postbank. Non-marketable bonds and other Treasury bills. Members’ interest in the reserves of retirement and all insurance funds. 2. 3. 4. 5. 6. 7. 93 Quarterly Bulletin June 2019 General government Corporate business enterprises Households, etc. Total Sectors Transaction items Central provincial governments Local governments Public sector Private sector S U S U S U S U S U S U -4 195 16 673 3 376 19 801 -16 218 6 384 50 16 486 -9 501 25 739 33 073 23 138 94 668 526 16 126 917 24 923 17 307 2 904 29 22 381 57 800 165 929 3 525 3 525 223 729 1. Net saving4 2. Consumption of fixed capital4 3. Capital transfers 4. Gross capital formation4 -10 699 -10 699 -26 270 -26 270 -16 835 -16 835 -8 601 -8 601 22 724 22 724 5. Net lending (+)/net borrowing (-) (S) 6. Net financial investment (+) or (-) (U) 127 852 117 153 2 025 -24 245 22 065 5 230 173 349 164 748 22 119 44 843 705 403 705 403 7. Net incurrence of financial liabilities (Total S 9 – 32) 8. Net acquisition of financial assets (Total U 9 – 32) -2 893 -779 7 795 -2 215 54 034 -823 -940 36 353 37 240 80 83 870 -13 978 3 810 7 385 44 7 451 -2 -7 919 69 234 -32 742 1 209 794 -1 823 1 020 513 312 -7 223 -14 936 498 -151 -6 2 14 -1 -2 331 -111 4 -680 394 3 023 -687 80 -5 009 4 590 -21 627 17 827 24 113 37 1 398 -4 559 2 878 -287 - 229 -70 - 3 378 - 178 28 729 -1 663 -20 873 - 291 - 13 12 584 13 756 -15 758 -10 540 84 386 12 332 8 883 69 139 -7 693 6 679 -406 -28 450 31 912 6 940 9 623 -20 925 -5 378 1 842 4 378 -2 182 -6 256 -52 627 17 625 -5 466 108 343 36 597 67 906 866 5 690 - 3 134 908 10 469 8 180 6 5 349 21 181 2 619 -5 600 447 15 393 -53 -187 14 50 21 525 -16 846 951 23 537 36 126 -29 420 94 056 12 921 56 500 4 003 67 356 6 832 7 726 -2 215 53 507 -823 -1 823 -939 3 854 87 223 101 566 19 416 26 401 71 102 39 819 28 218 460 23 537 36 126 -29 420 94 056 12 921 56 500 4 003 67 356 6 832 7 726 -2 215 53 507 -823 -1 823 -939 3 854 87 223 101 566 19 416 26 401 71 102 39 819 28 218 460 9. Gold and other foreign reserves 10. Cash and demand monetary deposits5 11. Short/Medium-term monetary deposits5 12. Long-term monetary deposits5 13. Funds placed with other financial institutions 14. Funds placed with other institutions 15. Treasury bills 16. Other bills 17. Bank loans and advances 18. Trade credit and short-term loans 19. Short-term government bonds 20. Long-term government bonds 21. Non-marketable debt of central government6 22. Securities of local governments 23. Securities of public enterprises 24. Other loan stock and preference shares 25. Ordinary shares 26. Foreign branch/head office balances 27. Long-term loans 28. Mortgage loans 29. Interest in retirement and life funds7 30. Financial derivatives 31. Amounts receivable/payable 32. Other liabilities/assets 33. Balancing item
National financial account Flow of funds for the third quarter 20181 R millions S = Sources, i.e. net increase in liabilities at transaction value. U = Uses, i.e. net increase in assets at transaction value. KB230 1. A negative amount reflects a decrease in that item. In the case of liabilities (sources) it denotes a reduction in the available sources of funds and in the case of assets (uses) it indicates an additional source of funds. Including mutual banks and the Postbank. Before April 2005 the Public Investment Commissioners. As taken from the national income (and production) accounts. Namely deposits with the South African Reserve Bank (including coin liabilities), Corporation for Public Deposits, banks, the Land Bank, mutual banks and the Postbank. Non-marketable bonds and other Treasury bills. Members’ interest in the reserves of retirement and all insurance funds. 2. 3. 4. 5. 6. 7. 94 Quarterly Bulletin June 2019 Sectors Transaction items Foreign sector Financial intermediaries Monetary authority Other monetary institutions2 Public Investment Corporation3 Insurers and retirement funds Other financial institutions S U S U S U S U S U S U 1. Net saving4.................................................... 2. Consumption of fixed capital4 ........................ 3. Capital transfers ............................................ 4. Gross capital formation4 ................................ 58 488 47 102 1 227 145 210 6 386 3 856 3 098 44 7 7 9 870 185 171 7 942 1 127 1 548 5. Net lending (+)/net borrowing (-) (S) ............... 6. Net financial investment (+) or (-) (U) .............. 58 433 58 433 1 162 1 162 7 144 7 144 44 44 9 884 9 884 7 521 7 521 7. Net incurrence of financial liabilities (Total S 9 – 32) .............................................. 8. Net acquisition of financial assets (Total U 9 – 32) .............................................. -60 882 - 2 449 16 058 17 220 89 057 96 201 36 941 36 985 58 548 68 432 86 929 94 450 9. Gold and other foreign reserves .................... 10. Cash and demand monetary deposits5 ......... 11. Short/Medium-term monetary deposits5........ 12. Long-term monetary deposits5 ...................... 13. Funds placed with other financial institutions . 14. Funds placed with other institutions .............. 15. Treasury bills ................................................. 16. Other bills...................................................... 17. Bank loans and advances ............................. 18. Trade credit and short-term loans.................. 19. Short-term government bonds ...................... 20. Long-term government bonds ...................... 21. Non-marketable debt of central government6 22. Securities of local governments..................... 23. Securities of public enterprises...................... 24. Other loan stock and preference shares ........ 25. Ordinary shares............................................. 26. Foreign branch/head office balances ............. 27. Long-term loans............................................ 28. Mortgage loans ............................................. 29. Interest in retirement and life funds7 ............... 30. Financial derivatives ...................................... 31. Amounts receivable/payable ......................... 32. Other liabilities/assets.................................... 33. Balancing item .............................................. -3 812 -1 463 1 331 1 846 15 910 -2 155 -7 672 -806 1 265 1 435 17 287 4 887 101 -69 939 644 - 19 741 -10 344 -18 638 -248 331 29 862 3 755 20 260 1 297 - 5 136 48 575 4 114 -65 430 -10 847 2 839 452 513 10 879 119 1 256 -3 812 -7 107 -16 387 -22 14 335 287 21 799 -40 260 -5 87 7 825 29 685 92 440 -5 602 -173 -5 505 2 600 1 410 -2 -35 -46 027 20 200 66 -2 794 872 1 904 4 740 -651 38 075 6 360 4 375 10 906 453 4 057 23 679 6 107 13 979 -779 -1 170 1 008 -14 690 -230 36 941 8 982 2 802 -1 065 -620 1 916 2 795 -32 9 670 - 1 783 1 012 12 090 1 218 1 916 1 691 -1 338 25 27 -2 41 532 387 5 076 9 175 59 4 444 3 680 685 -898 24 880 1 255 37 -96 -11 884 17 523 435 309 6 227 27 039 -4 371 -320 -2 661 7 358 -5 157 -53 52 905 12 052 12 286 -23 -10 435 141 -1 123 21 095 31 8 195 53 473 2 317 -1 463 1 349 -1 449 -329 2 542 -89 18 730 -220 -262 8 495 18 462 -697 198 -1 -880 1 195 -14 837 -279
National financial account (continued) Flow of funds for the third quarter 20181 R millions and S = Sources, i.e. net increase in liabilities at transaction value. U = Uses, i.e. net increase in assets at transaction value. KB231 1. A negative amount reflects a decrease in that item. In the case of liabilities (sources) it denotes a reduction in the available sources of funds and in the case of assets (uses) it indicates an additional source of funds. Including mutual banks and the Postbank. Before April 2005 the Public Investment Commissioners. As taken from the national income (and production) accounts. Namely deposits with the South African Reserve Bank (including coin liabilities), Corporation for Public Deposits, banks, the Land Bank, mutual banks and the Postbank. Non-marketable bonds and other Treasury bills. Members’ interest in the reserves of retirement and all insurance funds. 2. 3. 4. 5. 6. 7. 95 Quarterly Bulletin June 2019 General government Corporate business enterprises Households, etc. Total Sectors Transaction items Central provincial governments Local governments Public sector Private sector S U S U S U S U S U S U -49 538 17 174 15 113 19 212 -4 991 6 520 11 498 16 639 -8 903 26 243 31 414 16 544 97 982 426 17 143 109 32 237 17 667 3 291 30 24 804 69 306 170 906 15 262 15 262 240 212 1. Net saving4 2. Consumption of fixed capital4 3. Capital transfers 4. Gross capital formation4 -66 689 -66 689 -3 612 -3 612 -14 074 -14 074 -28 174 -28 174 28 361 28 361 5. Net lending (+)/net borrowing (-) (S) 6. Net financial investment (+) or (-) (U) 95 394 28 705 11 547 7 935 45 159 31 085 241 574 213 400 29 533 57 894 649 858 649 858 7. Net incurrence of financial liabilities (Total S 9 – 32) 8. Net acquisition of financial assets (Total U 9 – 32) 5 964 277 21 790 -7 670 61 375 88 13 570 -61 106 81 042 -3 678 10 014 44 455 -2 7 838 9 629 -15 531 1 693 -24 -102 36 9 629 315 816 3 693 1 960 1 466 -2 2 -1 1 -4 -277 -4 091 -2 908 21 574 2 732 9 565 -13 714 -615 5 937 26 720 240 5 956 11 133 -696 -235 364 -16 199 -602 -1 054 26 278 -10 222 -20 97 2 929 24 666 36 175 26 237 58 643 48 601 4 237 61 681 4 332 - 25 443 -581 73 060 -46 714 -6 446 37 164 3 286 2 158 8 726 -770 -10 237 18 919 -11 842 -1 426 16 823 40 227 89 761 711 10 973 -11 321 422 9 521 19 723 215 12 422 18 356 1 569 14 821 222 -16 880 -15 88 -2 -2 -21 39 624 -12 344 56 -3 812 32 524 92 440 -5 602 51 438 40 285 7 810 18 389 38 362 53 130 -7 670 60 569 88 -102 22 839 30 453 85 518 40 668 13 857 41 532 -54 372 48 278 43 106 130 -3 812 32 524 92 440 -5 602 51 438 40 285 7 810 18 389 38 362 53 130 -7 670 60 569 88 -102 22 839 30 453 85 518 40 668 13 857 41 532 -54 372 48 278 43 106 130 9. Gold and other foreign reserves 10. Cash and demand monetary deposits5 11. Short/Medium-term monetary deposits5 12. Long-term monetary deposits5 13. Funds placed with other financial institutions 14. Funds placed with other institutions 15. Treasury bills 16. Other bills 17. Bank loans and advances 18. Trade credit and short-term loans 19. Short-term government bonds 20. Long-term government bonds 21. Non-marketable debt of central government6 22. Securities of local governments 23. Securities of public enterprises 24. Other loan stock and preference shares 25. Ordinary shares 26. Foreign branch/head office balances 27. Long-term loans 28. Mortgage loans 29. Interest in retirement and life funds7 30. Financial derivatives 31. Amounts receivable/payable 32. Other liabilities/assets 33. Balancing item
National financial account Flow of funds for the fourth quarter 20181 R millions S = Sources, i.e. net increase in liabilities at transaction value. U = Uses, i.e. net increase in assets at transaction value. KB230 1. A negative amount reflects a decrease in that item. In the case of liabilities (sources) it denotes a reduction in the available sources of funds and in the case of assets (uses) it indicates an additional source of funds. Including mutual banks and the Postbank. Before April 2005 the Public Investment Commissioners. As taken from the national income (and production) accounts. Namely deposits with the South African Reserve Bank (including coin liabilities), Corporation for Public Deposits, banks, the Land Bank, mutual banks and the Postbank. Non-marketable bonds and other Treasury bills. Members’ interest in the reserves of retirement and all insurance funds. 2. 3. 4. 5. 6. 7. 96 Quarterly Bulletin June 2019 Sectors Transaction items Foreign sector Financial intermediaries Monetary authority Other monetary institutions2 Public Investment Corporation3 Insurers and retirement funds Other financial institutions S U S U S U S U S U S U 1. Net saving4................................................... 2. Consumption of fixed capital4 ....................... 3. Capital transfers ........................................... 4. Gross capital formation4 ............................... 17 133 46 107 1 546 152 171 12 401 4 007 5 675 131 7 7 8 473 192 248 12 124 1 165 1 084 5. Net lending (+)/net borrowing (-) (S) .............. 6. Net financial investment (+) or (-) (U) ............. 17 072 17 072 1 527 1 527 10 733 10 733 131 131 8 417 8 417 12 205 12 205 7. Net incurrence of financial liabilities (Total S 9 – 32) ............................................. 8. Net acquisition of financial assets (Total U 9 – 32) ............................................. 21 458 38 530 28 940 30 467 57 513 68 246 18 763 18 894 -864 7 553 12 424 24 629 9. Gold and other foreign reserves ................... 10. Cash and demand monetary deposits5 ........ 11. Short/Medium-term monetary deposits5....... 12. Long-term monetary deposits5 ..................... 13. Funds placed with other financial institutions 14. Funds placed with other institutions ............. 15. Treasury bills ................................................ 16. Other bills..................................................... 17. Bank loans and advances ............................ 18. Trade credit and short-term loans................. 19. Short-term government bonds ..................... 20. Long-term government bonds ..................... 21. Non-marketable debt of central government6 22. Securities of local governments.................... 23. Securities of public enterprises..................... 24. Other loan stock and preference shares ....... 25. Ordinary shares............................................ 26. Foreign branch/head office balances ............ 27. Long-term loans........................................... 28. Mortgage loans ............................................ 29. Interest in retirement and life funds7 .............. 30. Financial derivatives ..................................... 31. Amounts receivable/payable ........................ 32. Other liabilities/assets................................... 33. Balancing item ............................................. 6 183 -1 483 12 487 -1 290 8 824 -8 718 -33 352 839 1 700 12 639 45 107 11 481 4 398 -51 844 -564 15 051 8 511 19 121 2 077 195 56 113 -18 679 -636 - 989 1 442 -10 652 19 269 -3 580 -47 868 14 206 6 659 - 443 896 10 471 3 772 7 585 6 183 5 092 -2 639 -364 7 336 18 -3 721 86 66 -1 -2 18 413 34 928 21 831 -34 504 -637 1 547 77 296 255 5 209 1 021 -48 515 - 689 - 229 5 342 1 388 15 886 9 773 100 16 513 -10 883 -29 098 43 827 -982 1 946 19 542 -5 815 30 883 -292 -35 992 222 5 665 221 18 763 -8 983 8 647 -8 057 1 006 -7 012 1 264 -97 7 529 -1 962 -848 21 944 5 463 -7 012 - 4 508 412 214 1 248 34 408 -1 209 -6 821 -17 447 -149 4 494 4 549 -5 956 185 15 242 -2 963 -22 162 3 879 -1 171 1 448 -4 801 -50 243 -4 706 254 -409 14 501 33 083 27 18 538 15 430 - 2 437 - 31 2 480 242 -22 5 580 -27 267 -89 -2 667 -6 091 -30 460 -1 483 -2 579 2 357 -8 998 3 545 2 382 37 043 2 153 -2 261 -672 -39 352 -1 242 756 -2 -26 32 486 39 555 185
National financial account (continued) Flow of funds for the fourth quarter 20181 R millions and S = Sources, i.e. net increase in liabilities at transaction value. U = Uses, i.e. net increase in assets at transaction value. KB231 1. A negative amount reflects a decrease in that item. In the case of liabilities (sources) it denotes a reduction in the available sources of funds and in the case of assets (uses) it indicates an additional source of funds. Including mutual banks and the Postbank. Before April 2005 the Public Investment Commissioners. As taken from the national income (and production) accounts. Namely deposits with the South African Reserve Bank (including coin liabilities), Corporation for Public Deposits, banks, the Land Bank, mutual banks and the Postbank. Non-marketable bonds and other Treasury bills. Members’ interest in the reserves of retirement and all insurance funds. 2. 3. 4. 5. 6. 7. 97 Quarterly Bulletin June 2019 General government Corporate business enterprises Households, etc. Total Sectors Transaction items Central provincial governments Local governments Public sector Private sector S U S U S U S U S U S U -481 17 469 17 619 19 215 -13 393 6 649 13 701 17 673 -16 190 26 878 31 787 18 415 100 245 609 16 97 418 -15 844 17 958 3 416 30 25 759 24 315 174 722 17 772 17 772 199 037 1. Net saving4 2. Consumption of fixed capital4 3. Capital transfers 4. Gross capital formation4 -19 846 -19 846 -10 716 -10 716 -21 099 -21 099 21 835 21 835 -20 259 -20 259 5. Net lending (+)/net borrowing (-) (S) 6. Net financial investment (+) or (-) (U) 42 070 22 224 23 555 12 839 -35 854 -56 953 54 867 76 702 46 668 26 409 269 540 269 540 7. Net incurrence of financial liabilities (Total S 9 – 32) 8. Net acquisition of financial assets (Total U 9 – 32) 17 106 -61 -3 243 -25 288 72 596 -563 -1 094 -17 383 1 465 -4 324 -2 576 2 671 44 -27 -2 8 251 16 722 -1 172 -470 -90 23 25 176 88 7 947 4 371 -58 589 -3 -1 -6 -123 -7 791 -1 387 -3 453 -785 -11 057 -10 621 -98 896 15 753 -16 891 -297 -946 -10 750 -2 243 270 -99 1 439 -159 -440 122 -272 -52 886 -23 523 -20 890 -296 170 -8 617 -1 136 -27 568 7 941 - 59 415 13 357 15 718 35 265 43 722 35 293 137 16 814 15 559 1 949 24 258 7 013 -277 -53 370 -90 6 211 64 054 7 569 11 712 17 980 7 594 -49 598 -676 18 875 -260 672 11 633 632 15 116 4 518 -6 612 10 820 -9 353 200 13 250 -5 73 -1 176 26 622 -3 309 -9 970 6 183 41 587 21 831 -34 504 17 055 24 408 15 816 -553 16 531 4 967 -25 288 73 435 -563 -90 -1 753 20 431 -19 942 29 038 31 893 34 408 -65 429 44 691 35 927 -539 6 183 41 587 21 831 -34 504 17 055 24 408 15 816 -553 16 531 4 967 -25 288 73 435 -563 -90 -1 753 20 431 -19 942 29 038 31 893 34 408 -65 429 44 691 35 927 -539 9. Gold and other foreign reserves 10. Cash and demand monetary deposits5 11. Short/Medium-term monetary deposits5 12. Long-term monetary deposits5 13. Funds placed with other financial institutions 14. Funds placed with other institutions 15. Treasury bills 16. Other bills 17. Bank loans and advances 18. Trade credit and short-term loans 19. Short-term government bonds 20. Long-term government bonds 21. Non-marketable debt of central government6 22. Securities of local governments 23. Securities of public enterprises 24. Other loan stock and preference shares 25. Ordinary shares 26. Foreign branch/head office balances 27. Long-term loans 28. Mortgage loans 29. Interest in retirement and life funds7 30. Financial derivatives 31. Amounts receivable/payable 32. Other liabilities/assets 33. Balancing item
Abbreviations 4AX Agbiz Alsi BER CIT CPD CPI EESE EMBI+ FAO FNB FRA FX GDE GDP GVA HSI IDC IFRS IIP IMF IPP Jibar JSE MPC MTBPS NEER PGM PIT PPI PPP QES QLFS RAF SA Sabor SARB SARS SOC Stats SA US VAT 4 Africa Exchange Agricultural Business Chamber All-Share Index Bureau for Economic Research corporate income tax Corporation for Public Deposits consumer price index Equity Express Securities Exchange Emerging Markets Bond Index Plus Food and Agriculture Organization First National Bank forward rate agreement foreign exchange gross domestic expenditure gross domestic product gross value added Absa Homeowner Sentiment Index Industrial Development Corporation International Financial Reporting Standard international investment position International Monetary Fund independent power producer Johannesburg Interbank Average Rate JSE Limited Monetary Policy Committee Medium Term Budget Policy Statement nominal effective exchange rate (of the rand) platinum group metal personal income tax producer price index public–private partnership Quarterly Employment Statistics Quarterly Labour Force Survey Road Accident Fund South Africa(n) South African Benchmark Overnight Rate South African Reserve Bank South African Revenue Service state-owned company Statistics South Africa United States value-added tax 98 Quarterly Bulletin June 2019
