KA KAW AJV JV South Africas economy in 2030: : Ren enai aiss - - PowerPoint PPT Presentation

KA KAW AJV JV

South Africa’s economy in 2030: : Ren enai aiss ssan ance e or

• r De

Decay ay?

André é Roux USB 29 Mei 2019 2019

F O R E S I G H T

F ourth Industrial Revolution O riental R ewriting the economic paradigm E mpowerment of individuals S aturation I nequitable/ divided world G rey H otter and drier T ele-everything

F ourth Industrial Revolution

O riental R ewriting the economic paradigm E mpowerment of individuals S aturated I nequitable and divided G rey H

• tter and drier

T ele-everything

10 20 30 40 50 China USA India Japan Germany Mexico

% of workers needing to find new jobs due to automation in 2030 (MGI)

WEF survey (2016)

 10% of people wearing clothes connected to the Internet  1 trillion sensors connected to the Internet  The first robotic pharmacist in the USA  10% of reading glasses connected to the Internet  The first 3D-printed car in production  The first implantable mobile phone available commercially  5% of consumer products printed in 3D  Driverless cars equalling 10% of all cars in the USA  The first transplant of a 3D-printed liver  30% of corporate audits performed by artificial intelligence (AI)  Globally more trips/journeys via car sharing than in private cars  The first city with more than 50 000 people and no traffic lights  The first AI machine on a corporate board of directors

WEF

By 2025 …

Top 10 skills in 2020

1 Complex problem solving 2 Critical thinking 3 Creativity 4 People management 5 Co-ordinating with others 6 Emotional intelligence 7 Judgment & decision making 8 Service orientation 9 Negotiation 10 Cognitive flexibility

WEF, 2016

F

• urth Industrial Revolution

O riental

R ewriting the economic paradigm E mpowerment of individuals S aturated I nequitable and divided G rey H

• tter and drier

T ele-everything

Ranking Country Income group 1) PPP GNI ($bn) PPP GNI (% of world) Population (m) Population (% of world) PPP GNI per capita ($) 1 China UM 23 241.5 18.3 1 386.4 18.4 16 760 2 USA H 19 607.6 15.4 325.7 4.3 60 200 3 India H 9 448.7 7.4 1 339.2 17.8 7 060 4 Japan H 5 686.3 4.5 126.8 1.7 44 850 5 Germany H 4 274.0 3.4 82.7 1.1 51 680 6 Russia UM 3 721.6 2.9 144.5 1.9 24 890 7 Brazil UM 3 173.4 2.5 209.3 2.8 15 160 8 Indonesia LM 3 140.2 2.5 264.0 3.5 11 900 9 France H 2 939.3 2.3 67.1 0.9 43 790 10 UK H 2 810.0 2.2 66.0 0.9 42 560 WORLD TOTAL/ AVERAGE 127 307.8 7 530.4 16 906

30 largest economies ranked according to PPP GNI, 2017

World Bank, 2019

Ranking Country Income group 1) PPP GNI ($bn) PPP GNI (%

• f world)

Population (m) Population (% of world) PPP GNI per capita ($) 11 Italy H 2 400.0 1.9 60.6 0.8 39 640 12 Mexico UM 2 304.5 1.8 129.2 1.7 17 840 13 Turkey UM 2 112.2 1.7 80.7 1.1 26 160 14 Korea H 1 973.0 1.5 51.5 0.7 38 340 15 Saudi Arabia H 1 804.2 1.4 32.9 0.4 54 770 16 Spain H 1 769.5 1.4 46.6 0.6 37 990 17 Iran UM 1 705.2 1.3 81.2 1.1 21 010 18 Canada H 1 691.1 1.3 36.7 0.5 46 070 19 Thailand UM 1 180.1 0.9 69.0 0.9 17 090 20 Australia H 1 160.1 0.9 24.6 0.3 47 160 WORLD TOTAL/ AVERAGE 127 307.8 7 530.4 16 906

World Bank, 2019

Ranking Country Income group 1) PPP GNI ($bn) PPP GNI (%

• f world)

Popula- tion (m) Population (% of world) PPP GNI per capita ($) 21 Pakistan LM 1 148.4 0.9 197.0 2.6 5 830 22 Egypt LM 1 108.7 0.9 97.6 1.3 11 360 23 Nigeria LM 1 084.5 0.9 190.9 2.5 5 680 24 Poland H 1 060.2 0.8 38.0 0.5 27 920 25 Philippines LM 1 052.5 0.8 104.9 1.4 10 030 26 Malaysia UM 905.9 0.7 31.6 0.4 28 650 27 Argentina UM 897.2 0.7 44.3 0.6 20 270 28 Netherlands H 894.4 0.7 17.1 0.2 52 200 29 South Africa UM 742.6 0.6 56.7 0.8 13 090 30 Colombia UM 695.1 0.5 49.1 0.7 14 170 WORLD TOTAL/ AVERAGE 127 307.8 7 530.4 16 906

World Bank, 2019

2009: 525m 2030: 3 228m 2009: 338m 2030: 332m 2009: 664m 2030: 680m 2009: 137m 2030: 341m 2009: 181m 2030: 313m

Oxford Martin School, 2013

Global middle class

Daily expenditure $10-$100 per day per person

2009: 1.9bn 2030: 4.9bn

F

• urth Industrial Revolution

O riental

R ewriting the economic paradigm

E mpowerment of individuals S aturated I nequitable and divided G rey H

• tter and drier

T ele-everything

We We sho houl uld act act pro-act activ ively ely and and manag anage econom

• mic

ic gl glob

• bal

alizatio ization …. to to relea lease se its its pos positi itive imp impact …. We We sho hould ld st stri rike a bala alance betw between eff ffic icie iency and nd equi uity to to ensu nsure that hat dif iffe ferent nt countrie ntries, s, di diff fferent nt so social ial st strata rata and and di diff fferent nt group ups of

• f people

people all all sha hare in in th the be benefits nefits

• f
• f

ec econo nomic mic gl glob

• bali

alizatio

• zation. …. this

is is is our un unshir irkable kable respon

• nsibi

ibility ity as as leader ders of

• f our times.

Ev Every de decis ision

• n
• n

trade, rade,

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tax taxes, s,

• n
• n

imm immig igratio ration, n, on

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foreig ign af affair airs, s, will will be be made ade to to be benef nefit it Am Ameri rican wo workers and nd Am Ameri rican an fa families

• milies. We

We mus ust prot

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ect our bo borders fr from

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the he rav ravage ages of

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• ther

her countrie ntries mak aking ng our ur prod

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ts, st stealin aling

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com

• mpan

anies ies, and nd dest destroyi ying ng our jobs

• jobs. Prot
• tectio

tion wil ill lea lead to to great prosperi rity ty and strengt gth.

Lower growth path …. … is better than the alternative

F

• urth Industrial Revolution

O riental R ewriting the economic paradigm

E mpowerment of individuals

S aturated I nequitable and divided G rey H

• tter and drier

T ele-everything

Share of girls of primary school age enrolled 1970 65% 2015 90% Share of 1-year olds who get at least one vaccination 1980 22% 2016 88%

1800 10% 2016 86% Adult literacy Women’s right to vote 1893 1 country 2017 193 countries

Share of people with a cell phone 1980 0.0003% 2017 65% Share of people using the internet 1980 0% 2017 48%

F

• urth Industrial Revolution

O riental R ewriting the economic paradigm E mpowerment of individuals

S aturated

I nequitable and divided G rey H

• tter and drier

T ele-everything

The challenge of surviving prosperity

F

• urth Industrial Revolution

O riental R ewriting the economic paradigm E mpowerment of individuals S aturated

I nequitable and divided

G rey H

• tter and drier

T ele-everything

World’s richest 26 billionaires have as much money as the poorest 3.8bn people

£ 1.1 trillion

Unesco 2019

F

• urth Industrial Revolution

O riental R ewriting the economic paradigm E mpowerment of individuals S aturated I nequitable and divided

G rey

H

• tter and drier

T ele-everything

Age distribution

100 200 300 400 500 600 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 0-14 65+ 15-64

W Europe UN

2 4 6 8 10 12 14 16

• 0.6
• 0.4
• 0.2

0.2 0.4 0.6 0.8 1 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total factor productivity growth Old worker ratio (RHS)

G20

Computed from World Bank, 2017

Productivity

F

• urth Industrial Revolution

O riental R ewriting the economic paradigm E mpowerment of individuals S aturated I nequitable and divided G rey

H otter and drier

T ele-everything

Asahi Glass Foundation

F

• urth Industrial Revolution

O riental R ewriting the economic paradigm E mpowerment of individuals S aturated I nequitable and divided G rey H

• tter and drier

T ele-everything

 >300m Africans use the Internet (granting access to tele- education, tele- medicine)  Mobile money  100m active Facebook users  e-books; e-libraries

Ac Access cess to

• tele

le-ev ever erything ything

F ourth Industrial Revolution O riental R ewriting the economic paradigm E mpowerment of individuals S aturated I

nequitable and divided

G rey H otter and drier T ele-everything

Selected implications

Scenario Brief description

Stalled engines USA and Europe turn inward and globalisation stalls

NIC scenarios for 2030

NIC, 2013

Scenario Brief description Stalled engines USA and Europe turn inward and globalisation stalls

Fusion USA and China co-operate, leading to worldwide co-

• peration on global

challenges

NIC scenarios for 2030

NIC, 2013

Scenario Brief description Stalled engines USA and Europe turn inward and globalisation stalls Fusion USA and China co-operate, leading to worldwide co-operation on global challenges

Gini-out-of-the- bottle Economic inequalities dominate

NIC scenarios for 2030

NIC, 2013

Scenario Brief description Stalled engines USA and Europe turn inward and globalisation stalls Fusion USA and China co-operate, leading to worldwide co-operation on global challenges Gini-out-of-the-bottle Economic inequalities dominate

Non-state world Non-state actors take the lead in solving global challenges

NIC scenarios for 2030

NIC, 2013

Scenario Brief description Stalled engines USA and Europe turn inward and globalisation stalls Fusion USA and China co-operate, leading to worldwide co-operation on global challenges Gini-out-of-the-bottle Economic inequalities dominate Non-state world Non-state actors take the lead in solving global challenges

NIC scenarios for 2030

NIC, 2013

Worst

• utcome for

global growth and development Best outcome for global growth and development

The paradoxes of progress

Better machines Displaced workers Growing wealth Increase in rich/poor disparity; fewer workers for less-desired tasks New products Difficulty of making choices More, better food Obesity; clogged arteries Better health care Rising costs, higher expectations, health rationing Longer lives Cost of supporting idle elderly, stress on natural resources Better transport Decline of local communities More TV programmes Inactivity, desocialisation Increasing comfort Boredom, apathy

Re Re-ap apprais praisal al of rela lationship tionship between ween gr growth wth, wea wealth lth and devel velopm

• pment

ent

The paradoxes of progress

Mobile telephones Forced exposure to noxious chatter Easy bill paying Credit card fraud, identity theft Quick information Internet hoaxes, scams, viruses Cheap, easy messaging Junk e-mail, insensitive comments

So, in 2030, people could, on average, be richer than people today, and live longer …..but they may not be happier

Re Re-ap apprais praisal al of rela lationship tionship between ween gr growth wth, wea wealth lth and devel velopm

• pment

ent

56m people

Sectoral contribution to Gross Value Added

10 20 30 40 50 60 70 80

1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

Primary Secondary Tertiary

Computed from SARB

GDP growth

• 4
• 2

2 4 6 8 10 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Computed from SARB

Prime, inflation, and real prime

• 10
• 5

5 10 15 20 25 30 1970/01 1971/04 1972/07 1973/10 1975/01 1976/04 1977/07 1978/10 1980/01 1981/04 1982/07 1983/10 1985/01 1986/04 1987/07 1988/10 1990/01 1991/04 1992/07 1993/10 1995/01 1996/04 1997/07 1998/10 2000/01 2001/04 2002/07 2003/10 2005/01 2006/04 2007/07 2008/10 2010/01 2011/04 2012/07 2013/10 2015/01 2016/04 2017/07 2018/10

Real prime Prime Inflation Computed from SARB

Labour productivity and unit labour costs

% change compared with same period in previous year

• 2

2 4 6 8 10 12 14 16

1994/01 1994/04 1995/03 1996/02 1997/01 1997/04 1998/03 1999/02 2000/01 2000/04 2001/03 2002/02 2003/01 2003/04 2004/03 2005/02 2006/01 2006/04 2007/03 2008/02 2009/01 2009/04 2010/03 2011/02 2012/01 2012/04 2013/03 2014/02 2015/01 2015/04 2016/03 2017/02 2018/01

Labour productivity Unit labour costs

Computed from SARB

GDP and Disposable income per capita

5000 10000 15000 20000 25000 30000 35000 40000 10000 20000 30000 40000 50000 60000 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

GDP DI

Computed from SARB

Government debt and budget deficit as % of GDP

• 6
• 5
• 4
• 3
• 2
• 1

1 2 3 4 5 5 10 15 20 25 30 35 40 45 50 2000/01 2000/03 2001/01 2001/03 2002/01 2002/03 2003/01 2003/03 2004/01 2004/03 2005/01 2005/03 2006/01 2006/03 2007/01 2007/03 2008/01 2008/03 2009/01 Budget deficit Total gross debt SARB historical series

Government debt and budget deficit as % of GDP

• 10
• 8
• 6
• 4
• 2

2 4 6 10 20 30 40 50 60 2000/01 2000/04 2001/03 2002/02 2003/01 2003/04 2004/03 2005/02 2006/01 2006/04 2007/03 2008/02 2009/01 2009/04 2010/03 2011/02 2012/01 2012/04 2013/03 2014/02 2015/01 Budget deficit SARB historical series Total gross debt

Government and household debt (Rm)

500000 1000000 1500000 2000000 2500000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Household debt (Rm) Govt debt (Rm)

Computed from SARB

Gross fixed capital and Gross domestic savings % of GDP

5 10 15 20 25 30 35 40

GFCF Gross savings

Computed from SARB

Import cover ratio (months)

1 2 3 4 5 6

Computed from SARB

Effective exchange rate of the Rand

200 400 600 800 1000 1200

1980/05 1981/05 1982/05 1983/05 1984/05 1985/05 1986/05 1987/05 1988/05 1989/05 1990/05 1991/05 1992/05 1993/05 1994/05 1995/05 1996/05 1997/05 1998/05 1999/05 2000/05 2001/05 2002/05 2003/05 2004/05 2005/05 2006/05 2007/05 2008/05 2009/05 2010/05 2011/05 2012/05 2013/05 2014/05 2015/05 2016/05 2017/05 2018/05

Computed from SARB

40 60 80 100 120 140 160 2000/01 2000/08 2001/03 2001/10 2002/05 2002/12 2003/07 2004/02 2004/09 2005/04 2005/11 2006/06 2007/01 2007/08 2008/03 2008/10 2009/05 2009/12 2010/07 2011/02 2011/09 2012/04 2012/11 2013/06 2014/01 2014/08 2015/03 2015/10 2016/05 2016/12

SARB

Bewilderingly volatile Rand exchange rate

Comp mpetin eting g in the global l econo nomy my Deal aling ng with th the demo mocr cratic c surp rplu lus Soci cial l capita pital l – depr preci eciatio tion n or appr preci eciatio tion? n? Genera erating ting suffic icie ient nt appr propr priat iate e skill lls Genera erating ting suff ffici cien ent t savi ving ngs Autonom nomy of demo mocr cratic c instit titutions utions Exploiti ploiting ng the demo mogr graphi hic c divide idend nd

Compet peting ing in the global al ec economy

• my

Dealing with the democratic surplus Social capital – depreciation

• r

appreciation? Generating sufficient appropriat e skills Generating sufficient savings Autonomy

• f

democratic institutions Exploiting the demograp hic dividend

52 53 56 49 47 62 67

40 45 50 55 60 65 70

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Global competitiveness SA ranking

Africa ranking World ranking Country 1 49 Mauritius 2 67 South Africa 3 75 Morocco 4 90 Botswana 5 100 Namibia

WEF, 2017, 2018

Competing in the global economy Dealin

ing with th the e democrat

• cratic

c surpl rplus us

Social capital – depreciation

• r

appreciation? Generating sufficient appropriat e skills Generating sufficient savings Autonomy

• f

democratic institutions Exploiting the demograp hic dividend

Democracy without economic emancipation?

Afrobarometer, 2018

Competing in the global economy Dealing with the democratic surplus

Social al capital al – depreciati iation

• n or

appreciati iation?

• n?

Generating sufficient appropriat e skills Generating sufficient savings Autonomy

• f

democratic institutions Exploiting the demograp hic dividend

OECD networks together with shared norms, values and understandings that facilitate co-operation within or among groups

Afrobarometer, 2018

How much do you trust the president?

Competing in the global economy Dealing with the democratic surplus Social capital – depreciation or appreciation?

Generating nerating sufficient fficient appropri

• priat

ate skills ls

Generating sufficient savings Autonomy

• f

democratic institutions Exploiting the demograph ic dividend

10 20 30 40 50 60 70 80 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Primary Secondary Tertiary

 60% of adults: fewer than 12 years of education  23% of adults: 7 years or less of education  5% of adults: No education The biggest challenge in South Africa is the unequal quality of school education, its low average level and the high drop-out rates … shortages and mismatches of skills are barriers to growth and inclusiveness (OECD, 2017)

Structure of SA economy

SARB; StatsSA

Competing in the global economy Dealing with the democratic surplus Social capital – depreciation or appreciation? Generating sufficient appropriate skills

Generating nerating sufficient fficient savin ings gs

Autonomy of democratic institutions Exploiting the demographic dividend

Gross fixed investment and gross domestic savings as % of GDP

Computed from SARB

10 12 14 16 18 20 22 24 26 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

GDFI/GDP GDS/GDP

Competing in the global economy Dealing with the democratic surplus Social capital – depreciation

• r

appreciation? Generating sufficient appropriate skills Generating sufficient savings

Autonomy

• nomy
• f

democra ratic tic instituti titutions

• ns

Exploiting the demograph ic dividend

Because institutions establish constraints – both legal and informal (norms of behavior), they determine the context in which individuals

• rganize themselves and their

economic activity. Institutions influence productivity, mainly through providing incentives and reducing uncertainties

29 21 16 106 9 10 99 115 1 56 36 36 89 31 36 122 118 30 97 60 48 84 40 56 125 119 55 20 40 60 80 100 120 140 Property rights Intellectual property protection Judicial independence Burden of govt regulation Efficiency of legal framework in settling… Efficiency of legal framework in… Organised crime Reliability of police services Strength of auditing and reporting… 2018-19 2017-18 2016-17

Pillar 1: Institutions

WEF, 2014, 2016, 2017, 2018

Competin ting g in the global al economy Dealing ng with the democrat ratic ic surplus lus Social al capital al – deprecia iation tion or apprecia iatio ion? n? Generat ating ng suffic icie ient t appro ropr priat ate skills ls Generat ating ng suffic icie ient t savings ngs Autono nomy y

• f

democrat ratic ic instit itutions utions

Ex Exploi loiting ting the e demograp

• graphic

c divide dend nd

StatsSA, 2017

The accelerated economic growth that a country can achieve when it has a low dependency ratio or, in other words, when the proportion of its population that is of working age is greater than the proportion of its population that doesn’t work (e.g. children and the elderly). This population structure frees up household and state resources that would

• therwise be used to support dependent groups. These resources can then be

invested to improve productivity and generate economic growth

REACT CTIVE IVE/ PASSI SIVE E FACT CTORS ORS  Comp mpeti ting ng in a a crisis is-pr prone

• ne global

al economy nomy  Dealin ing g with the democ

• cra

rati tic surplus lus  Social al capital al – depreciati ation

• n or

appreciati ation?

• n?

 Genera ratin ting g suffic ficient ient savi vings ngs  Exploi loitin ting g the demog

• gra

raphi hic c dividend nd ACTI TIVE E FACTORS ORS/ LEVERS RS  Genera ratin ting g suffic ficient ient appropriat

• priate skill

lls  Autono tonomy my of democ

• cra

ratic tic insti titutions tutions

Inappropriate, low-level skills Competitive, high-tech skills Institutional decay Institutional renaissance

Hope springs eternal Winter of discontent Gold at the end of the rainbow Indian Summer

Winter of discontent

Gold at the end of the rainbow

What does the future look like? What do you want it to look like?

Fatalism virtually guarantees failure

 An upper middle-income economy  Among the 30 largest in the world  Sophisticated and respected financial infrastructure  Diversified economy  Monetary policy sanity generally prevails  Window of demographic opportunity  Proven record of resilience  Innovative

can’t we wh y

Why we can’t

Why can’t we?

Sometimes things have to get worse before they get better ….

T0 T1 T2 Tn

Vacuum of uncertaint y

De Coning

By income GNI per capita Number of countries By region Number of countries Low income <$996 34 East Asia and Pacific 38 Lower middle income $996 - $3 895 47 Europe and Central Asia 58 Upper middle income $3 896-$12 055 56 Latin America and the Caribbean 42 High income >$12 055 81 Middle East and North Africa (MENA) 21 North America 3 South Asia 8 Sub-Saharan Africa (SSA) 48 WORLD 218 218

Classification of countries by income and region

World Bank, 2019

Distribution of population and output

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Population GNI

Low income Lower middle income Upper middle income High income World Bank, 2019

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Population GNI

E Asia & Pacific Eur & C Asia L Amer & Carib MENA N Amer S Asia Sub-Sah Africa

Distribution of population and output

World Bank, 2019

Who produces what?

33 27.4 16.4 12.2 6.5 18 16.6 28.9

8.9 1.3 2.6 1.7

51.5 53.4 64.4 57.1

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Agriculture Manufacturing Industry excl manufacturing Services

China USA SSA Rest of world World Bank, 2019