WELCOME
Economics Course
PGDIP MANAGEMENT
& BCOM HONOURS
ECONOMETRIX | Leaders in Economic Insight
1
Intro to basic economic concepts
Quiz
What is economics about?
Micro vs Macro
2
Market forces
Circular Flow Model
Supply and Demand
3
Economic growth (National Accounts)
GDP, Consumption, Investment, Government spending,
Balance of payments
Cycles
4 Economic
Monetary policy and fiscal policy
5 The South African economic environment
6
Practical exercises
INTRODUCTION TO
ECONOMICS
“Nobody ever became rich from knowledge of
economics, but nobody who is rich got that way
without an understanding of how economic forces
work……..” Anonymous
ECONOMETRIX | Leaders in Economic Insight
•
Who is the Governor of the Reserve Bank?
•
Who was the previous Governor of Reserve Bank?
•
What is the repo rate today?
•
What is the prime interest rate today?
•
What is the largest sector in the South African economy?
•
What is the GDP growth rate of China?
•
What is the GDP growth rate of India?
•
What is the GDP growth rate of the USA?
•
What is the GDP growth rate of South Africa?
•
What is the largest economy in the world?
•
What is our unemployment percentage in SA?
What does economics deal with?
• Economics is a social science and can also be used to
describe the way the world actually works
• Closely linked to political and social systems –
economic policies can affect political choices and
vice versa
• Study of economics focusses on:
What /How / For whom to produce??
“The first lesson of economics is
scarcity: there is never enough of
anything to satisfy all those who
want it.
The first lesson of politics is to
disregard the first lesson of
economics.”
Thomas Sowell
Economics is about:
• Matching what one needs (demand) with what one has (supply)
• Provision of goods & services using resources
INPUTS
Resources:
Labour
Capital
Entrepeneurs
Land
OUTPUTS
NEEDS
defined
“It is the study of the way in which human-beings
employ scarce resources (with alternative uses) to
satisfy their many needs”.
 Ultimately the “study of choices”
 It is an art and a science!
 Economics is made up of two main disciplines:
micro & macro economics
Micro vs
MACRO ECONOMICS
Micro
⁻ economics at the small level
⁻ Individual, household or company level
MACRO
⁻ economics at the big/high level
⁻ or level of government
⁻ looks at economy as a whole
Macro economics
•
The study of the economy as a whole
•
Macroeconomics answers questions such as the following:

Why is average income high in some countries and low in others?

Why do prices rise rapidly in some time periods while they are
more stable in others?

Why do production and employment expand in some years and
contract in others?

What is the annual health care spend in SA?
Micro economics
•
The study of how individuals, households and firms
make decisions and how they interact with one another
in markets.
•
Micro-economics answers questions like:

Why is Sandton richer per capita than Gugulethu?

Why are transaction numbers in North West falling?

What will ticket prices be for the Gautrain?
MARKET FORCES
CIRCULAR FLOW MODEL
SUPPLY VS DEMAND
ECONOMETRIX | Leaders in Economic Insight
The economy – where do you fit in?
• Ever wondered what makes the economy go round?
• Who are the participants in an economy and what are their roles?
Income
Production
Aggregate Supply =
total supply of goods &
services produced
within an economy at
a given price level in a
given time period
Supply
(AS)
Spending
Demand
(AD)
Aggregate Demand = total
demand of goods &
services in an economy at
a given time period. It
describes the relationship
between price levels &
quantity of output that
firms are willing to provide
Introduction to the Circular
Flow Model
• Shows how households, government and
businesses are connected to each other by the flow of
physical things (goods or labour) and of money (what
pays for physical things).
• Households, owners of production factors such as land,
labour and capital
make their services available to business sector,
in exchange businesses pay households income (money)
Money income
(salaries, wages)
costs
Resource Market
Land, labor,
capital &
entrepreneurial
activity
Resources
Expenditure
Resources
Goods and services
Goods and services
Government
Business
Net taxes
Net taxes
Expenditure
Goods and
services
Goods and
services
Goods and
services
Product Market
Revenue
Households
Consumption
expenditures
No man/business is an island….
War
Consumers:
high, middle,
low, traders,
hawkers,
inside &
outside SA
Economic
cycles
Supply/
Demand
Suppliers:
Competitors
Your Business
Inside &
outside SA,
goods,
electricity,
labour
Inflation
OPEC
Government,
Unions, Trade
associations
Politics
Power
Interest
rates
Economic systems and the market
Traditional
System
Command
system
Mixed System
Keynesian
mixed
capitalism
Social
Democracy
capitalism
Communism
Chinese mixed
•Type attempted by
Chinese and other quasi
Marxist countries
•State directs all
economic activity
•Allocates productive
assets
•Type attempted by
European and
Scandinavian countries
[And India]
•Government
intervention acceptable
• SD: High tax and
provision of services
• KD: Acceptable to run
budget deficits to
stimulate demand
Free Market
Capitalism
Capitalism
•Type attempted by the
USA
•Minimal government
intervention
•Based on tenets of Adam
Smith
•“The invisible hand” of
the market will bring
together the producers and
the consumers
•Governments only role is
to ensure property rights
and the sovereignty of the
country
Demand
• Quantity demanded = amount of a product people
are willing and able to buy at a certain price
• The law of demand  there is an inverse (opposite)
relationship between price and quantity demanded
Demand Curve
High price, low quantity demanded
Price of a cup Quantity
of coffee
demanded
$0
24
$1
20
$2
16
$3
12
$4
8
$5
4
$6
0
Low price, high quantity demanded
Demand curve = downward-sloping line relating price to quantity demanded
Changes in the quantity demanded is caused by change in price of product (e.g
increase in tax on product)
Supply
• Quantity demanded = amount of a product that
sellers are willing and able to sell at a certain price
• The law of supply  there is an direct (positive)
relationship between price and quantity supplied
Supply Curve
Price of a cup Quantity
of coffee
supplied
$0
0
$1
6
$2
9
$3
12
$4
15
$5
18
$6
21
High price, high quantity supplied
Low price, low quantity supplied
Determinants of supply
•
•
•
Production costs (how much a goods costs to be produced) = cost of inputs (labour, capital, energy and
materials). They depend on the technology used in production, and/or technological advances.
Firms' expectations about future prices
Number of suppliers (competition)
Supply and Demand together
Market equilibrium
Price of a cup
of coffee
$0
$1
$2
$3
$4
$5
$6
Quantity
supplied
0
6
9
12
15
18
21
Price of a cup Quantity
of coffee
demanded
$0
24
$1
20
$2
16
$3
12
$4
8
$5
4
$6
0
At $3 the quantity demanded is equal to the quantity supplied!
Equilibrium = situation where there is no tendency for change; when there is no reason for the
market price of the product to rise or to fall.
This occurs at the price at which the quantity demanded equals quantity supplied.
At this price, the amount that consumers wish to buy is exactly the same as the amount that
producers wish to sell.
There are no unsatisfied buyers: buyers are able to purchase all they want to at that price.
There are no unhappy sellers: producers are able to sell all they want to at that price.
Shortage demand & excess supply
Equilibrium occurs at a price of $3.
The equilibrium quantity is 12 cups of coffee.
• When price is above equilibrium of $3, quantity
supplied is greater than quantity demanded. Firms
are unable to sell all they want to at that price.
There is an excess supply (surplus/glut) and there is
pressure for the price to fall.
• If price is below equilibrium, there is excess
demand (shortage) and this creates pressure for
the price to rise.
• Only at the equilibrium price is there no pressure
for price to rise or fall.
Quantity
Supplied
Price
Quantity
Demanded
Result
What happens
to price?
18
$5
4
QS > Q D
excess supply
price falls
15
$4
8
QS > Q D
excess supply
price falls
12
$3
12
QS = QD
no surplus/no
shortage
equilibrium
9
$2
16
QD > QS
excess demand
price rises
6
$1
20
QD > QS
excess demand
price rises
ECONOMIC GROWTH &
DRIVERS OF GDP
EXPLAINING KEY ECONOMIC CONCEPTS
GROSS DOMESTIC PRODUCT
CONSUMPTION
INVESTMENT
GOVERNMENT SPENDING
BALANCE OF PAYMENTS
ECONOMETRIX | Leaders in Economic Insight
Gross domestic product (GDP)
Economic Growth
• GDP = market value (in Rand etc) of all final goods and services produced
domestically in a single year /quarter (SA is a R3.8 trillion economy)
• Most important measure of economic performance.
• Economic growth = increase in an economy’s capacity to produce goods and
services, compared from one period of time to another (= % change in GDP)
• Economic growth literally refers to an economy that is getting bigger, not
necessarily one that is getting better.
• Increasing growth depends on the power of the economy to increase either
the quantity and/or quality of production factors (labour/capital) over time
or to introduce improved production techniques
How is GDP measured/calculated?
• In SA, Statistics South Africa (StatsSA) and the SA Reserve Bank is tasked with
calculating GDP
Consumer
• 2 methods:
expenditure is the
Expenditure approach
GDP is calculated by adding all expenditure:
main contributor
to GDP in SA
(64%)
GDP = C + I + G + (X - IM)
Consumers + Investment (business) + Government + (eXports-IMports)
Income approach
GDP = Income (wages+rent+profits+income) –
Depreciation – Indirect tax
The rationale behind income approach is that total expenditures on
final goods & services are eventually received by households &
firms in form of wage, profit, rent, and interest income. By adding
together all income earned by households/firms, one should obtain
the same value of GDP as obtained using expenditure approach.
Measuring GDP
Removing the Price Effect
Economic growth can be measured in:
• nominal terms, which include inflation (eg if this year inflation is 3% and we have 2%
economic growth, nominal GDP will have risen by 5%).
• real terms, which are adjusted for inflation (price rises) - price effect is stripped out as it
doesn’t show increase in capacity.
When we think of the price of a good, we
often think of its nominal price. The nominal
price of a good is the cost of the good at the
current price level.
Changes in nominal prices result directly from
changes in the price level due to inflation.
The real price of a good is the cost of the good at a base
year price level.
For example if the cost of a ball in 2005 was R10 and the
current cost of the ball is R12, we would say the real price of
the ball is R10 with base year 2005.
What is nominal
prices?
What is real
prices?
Measuring GDP
Removing the Price Effect - example
Real GDP and nominal GDP for an economy producing only shoes and video games over 3 years.
We will assume consumption is the only part of this economy’s GDP.
We will use year 1 for our base year.
Year
Price of Shoes
Quantity of Shoes
Price of Video Games
Quantity of Video
Games
1
R30
5
R40
5
2
R35
6
R42
10
3
R40
5
R50
8
Year 1:
Nominal: (5 shoes x R30/shoe) + (5 video games x R40/game) = R350
Real: Because year 1 is the base year, real GDP = nominal GDP = R350
Year 2:
Nominal: (6 shoes x R35/shoe) + (10 video games x R42/game) = R630
Real: (6 shoes x R30/shoe) + (10 video games x R40/game) = R580
Year 3:
Nominal: (5 shoes x R40/shoe) + (8 video games x R50/game) = R600
Real: (5 shoes x R30/shoe) + (8 video games x R40/game) = R470
Notice that from year 2 to year 3 there was a slight decrease in the nominal GDP of the economy but a
major decrease in the real GDP of the economy. This is very common in economics. It is also very possible
for an economy’s nominal GDP to increase while it’s real GDP decreases.
Growth in GDP
Year
GDP at current prices
GDP at real prices
1
R350
R350
2
R630
R580
3
R600
R470
Question: What has been the growth in output between Y2 and Y1?
Apply the growth formula:
% growth = (Y2/Y1) -1 x 100
Current prices 80%; Real prices
65.7%
Question: What has been the growth in output between Y3 and Y2?
Current prices -4.8%; Real prices
-18.9%
Consumption
Final Consumption Expenditure by Households
•
Consumption is the value of goods and services
bought by people
•
Consumption is normally the largest GDP component.
•
Economic performance of a country is usually judged mainly in terms of
consumption level and dynamics.
•
Consumption is divided according to the durability of the purchased objects.
o durable goods (cars, television sets)
o non-durable goods (food, beverages, cigarettes)
o semi-durable goods (clothes, shoes)
o services (restaurants, holidays, hairdresser)
•
Determinants:
o Income (current & future expectations)
o Savings
Investment
Gross fixed capital formation
•
Measure of amount that total physical capital stock
increased in a country
•
Capital formation does not include financial assets such as stocks and securities.
•
Most volatile component of GDP
•
3 ways to calculate/add
By economic activity
• Agriculture
• Mining
• Manufacturing
• Electricity & water
• Construction
• Trade & accommodation
• Transport & communication
• Finance , insurance & real
estate
• Services
By type of organisation
• General government
• Public corporations (eg
Transnet)
• Private business
By type of asset
• Residential buildings
• Non-residential buildings
• Construction works
• IT & telecom equipment
• Transport equipment
• Machinery
• Research & development
• Computer software
• Mineral exploration &
evaluation
• Cultivated biological
resources
Government Spending
•
Government expenditure = money that a
government spends
Expenditure occurs on every level of
R126.4bn
government, from local municipalities to
provincial and national government
R203.5bn
R155.3bn
departments
•
R157.3bn
Not all basic needs are always met by
the private sector.
R64.4bn
Some goods/services may not be
produced, while others may be not be
produced in enough quantity or at
R62.2bn
affordable rate for all citizens
Government expenditure  creation
and implementation of these goods and
services
•
Examples : military, police, public
schools, health care programmes, public
transportation infrastructure
R199.6bn
R206.2bn
Where does government obtain its
revenue to spend?
Central Government Expenditure % of Total
2014/15
2015/16
2016/17
2017/18
Compensation of employees
35.8
35.5
35.2
34.5
Debt-service cost
9.3
9.4
9.7
9.8
Transfers and subsidies
32.7
33.0
32.7
31.9
Payments for capital assets
6.9
7.2
7.2
7.1
Payments for financial assets
0.3
0.3
0.0
0.0
Goods & Services
14.5
13.9
13.8
13.4
Total expenditure
100
100
100
100
Source: National Treasury
Imports & Exports
An open economy interacts with rest of the world in 2 ways:
• buys and sells goods & services
• buys and sells real & financial assets
Exporting and importing helps grow national economies and expands global market
Every country is endowed with certain advantages in resources & skills eg, some countries are
rich in natural resources, while other countries have shortages of these resources
Exports = sale of goods to a foreign country,
Countries want to be net exporters rather
than net importers.
The more a country exports, the more
domestic economic activity is occurring.
More exports means more production, jobs
and revenue. 
If a country is a net exporter, its gross
domestic product increases, which is the
total value of the finished goods & services it
produces in a given period of time.
Net exports increase the wealth of a country.
Imports = purchase of foreign manufactured
goods in buyer's domestic market.
Countries often need to import goods that
are either not readily available domestically
or are available cheaper overseas.
Often imported products provide a better
price or more choices to consumers, which
helps increase their standard of living.
Importing gives access to important resources
and products not otherwise available or at a
cheaper cost.
However, if a country imports more than it
exports, more money is leaving the country
than is coming in through export sales. 
Balance of payments (BoP)
BoP = record of a country's:
trade in goods & services with rest of world
+
real & financial assets with rest of world
BoP consists of 2 parts:
Measured by Current Account (C/A)
Measured by Capital & financial account
Current account balance =
Exports of goods + Service receipts + Income
receipts
- Imports of goods + Service payments + Income
payments
+ net (unilateral) transfers
Services: eg shipping, banking and tourism
Income  Compensation of employees +
Investment income (interest payments & dividends
people receive from assets owned outside of their
own country)
Transfer  when one party gives something but
receives nothing in return, e.g. foreign aid
•
•
•
Capital account measures net (unilateral) transfers
of assets between countries
( eg debt forgiveness / migrant transfers of assets
they take with them when they move out of a
country)
Financial account = financial inflows - financial
outflows
A financial inflow  when citizen sells an asset to
another country, e.g. a U.S. Treasury bill is sold to
Chinese investors
A financial outflow  when a citizen buys an
asset from abroad, e.g. an American obtains a
Swiss bank account.
Capital and financial account balance =
capital account balance
+ financial inflows - financial outflows
BoP must balance
Current Account Balance + Capital and Financial
Account Balance = 0
The balancing account is called Gold and Cash Reserves
ECONOMIC CYCLES
TOOLS: MONETARY POLICY
FISCAL POLICY
ECONOMETRIX | Leaders in Economic Insight
Business cycles
Economies go through regular pattern of ups & downs in value of GDP
= business cycle
Business cycle  fluctuations in economic output in a country,
characterised by 4 phases:
• Slump
• Recession
• Recovery
• Boom
Recession / slump
Slump = overall economic activity starts to decline
Recession = business cycle contraction = two
quarters of negative growth rate of real GDP 
Depression: sustained, long-term downturn
in economic activity in one or more
economies. More severe downturn than
economic recession. Very weak consumer
spending & business investment; many
business failures; rapidly rising
unemployment; prices may start falling
(deflation)
Falling levels of consumer spending & confidence,
lower profits for businesses; start to cut back on
investment. Spare capacity increases + rising
unemployment as businesses cut back, reduce
stocks. Liquidations rise.
Boom/ recovery
Boom = High levels of consumer spending, business confidence, profits & investment.
Prices & costs rise faster. Unemployment low as growth in economy creates new jobs
Recovery = Things start to get better
Consumers begin to increase spending;
Businesses feel bit more confident, start to invest again and build stocks; but takes time for
unemployment to stop growing
Business cycle phases of SA since 1945
Source: SARB
How does government stabilise the economy
from shocks caused by the business cycle?
• Government tries to stabilise the economy
• Using macroeconomic policies/tools
Fiscal Policy
• Taxes
• Government
Spending
Monetary Policy
• Control of money
supply
• Interest rates
Monetary Policy
• Rests with the central bank (SA Reserve Bank)
• Main goal is price stability –
• SA has adopted inflation targeting in Feb 2000
= where central bank announces an explicit
inflation target and implements policy to
achieve this target directly.
Fiscal Policy
• Government spending – to stimulate the
economy government creates jobs by
employing people in infrastructure
development, public works programmes etc
• Taxes – to stimulate spending in the economy
government cuts taxes people have more
money left over
they spend this money,
which in turn creates demand and jobs
UNPACKING THE SOUTH
AFRICAN ECONOMY
ECONOMETRIX | Leaders in Economic Insight
Impact of global economy on SA
SA in context of rest of world
• According to the Global Competitiveness Report 2014/15, SA ranks 56th
out of 144 economies surveyed globally
• Chart below indicates most problematic factors for doing business in SA
Most problematic factors for doing business in SA
0.2
Government instability/coups
1
Tax rates
1.2
Poor public health
Tax regulations
1.5
Inflation
1.5
Foreign currency regulations
2.1
Access to financing
2.2
Crime and theft
2.5
Insufficient capacity to innovate
3
5.2
Poor work ethic in national labor force
7.4
Policy instability
9.8
Inadequate supply of infrastructure
11
Corruption
14.8
Inefficient government bureaucracy
16.9
Inadequately educated workforce
19.8
Restrictive labor regulations
0
5
10
15
20
25
SA GDP
• SA average GDP Growth for 2014 was 1.5%
• GDP growth for 2015 projected to be 1.9%
BUT….
GDP growth to achieve targets set out in NDP to create jobs by 2020
GDP: annual
6.0
5.6
5.4
5.3
5.0
4.6
4.3
4.2
4.0
3.7
3.2
3.0
3.0
2.9
2.7
2.6
3.2
2.4
2.2
2.2
2.2
1.9
2.0
1.5
1.0
0.5
0.0
-1.0
2016
2015
2014
2013
2012
2011
2010
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
Source: South African Reserve Bank
2009
-1.5
-2.0
1996
Percentage change
(year-on-year)
Require 5%
Contribution to GDP by sector
Shares of sectors in GDP: Q4 2014
Community,
social and
personal
services
22.7%
Agriculture
2.3%
Mining
8.5%
Manufacturing
13.4%
Electricity
3.3%
Finance
20.9%
Construction
4.2%
Transport
10.1%
Source: SARB
Trade
14.5%
Trade with Africa
South Africa in context of Africa
SA’s Imports & Exports
Main Imports
Main Exports
Machinery and equipment
Gold
Chemicals
Diamonds
Petroleum products
Platinum
Scientific instruments
Food products
Some key macroeconomic indicators &
interpretation
•
•
•
•
•
•
Unemployment – Q4 2014 24.3%
GDP growth y/y - 2014 1.5%
Trade deficit – 2014 R7.9bn
Inflation (CPI) –2014 6.1%
Inequality (GINI coefficient) – 0.7 (statssa)
Prime vs Repo rate – 9.25% vs. 5.75%
5 key macroeconomic concerns of SA
government
•
•
•
•
•
Ensuring economic growth
Maintaining price stability
Reducing unemployment
Balance of payments stability
Reducing inequality
Structural weaknesses preventing higher economic
growth
Negative
X Intensification of electricity / loadshedding
X Public sector wage strike
X Further loss of confidence in institutions
X Further declines in growth of Eurozone or China
Positive
 Lower oil prices boost disposable income
 Solid financial health of business sector
 Knock on effects of monetary easing globally
Introduction to inflation
“Inflation is when you pay fifteen dollars for the tendollar haircut you used to get for five dollars when you
had hair.” Sam Ewing
• CPI – measures consumer inflation
• PPI – measures producer inflation
• Negative effects of inflation –
redistributive effect
Price Stability
• Goal of every government to ensure inflation
is contained
• Inflation measured in SA by CPI
• CPI uses a basket of goods and assigns
different weights to different items
Source: StatsSA
Feb-15
Oct-14
Jun-14
Feb-14
Oct-13
Jun-13
Feb-13
Oct-12
Jun-12
Feb-12
Oct-11
Jun-11
Feb-11
Oct-10
Jun-10
Feb-10
Oct-09
Jun-09
Feb-09
Oct-08
Jun-08
Feb-08
Oct-07
Jun-07
Feb-07
Oct-06
Jun-06
Feb-06
Oct-05
Jun-05
Feb-05
Oct-04
Jun-04
Feb-04
Percentage (%)
Inflation : Consumer Price Index (CPI)
Headline CPI
13
11
9
7
5
3
1
-1
-3
-5
CPI Weights, 2012
Product
Weight in CPI basket
Food
14.20%
Alcoholic beverages and tobacco
5.43%
Clothing and footwear
4.07%
Housing and utilities
24.52%
Household content, equipment and
maintenance
4.79%
Health
1.46%
Transport
16.43%
Source: South African Reserve Bank
2016Q4
2016Q2
2015Q4
2015Q2
2014Q4
2014Q2
2013Q4
2013Q2
2012Q4
2012Q2
2011Q4
2011Q2
2010Q4
2010Q2
2009Q4
2009Q2
2008Q4
2008Q2
2007Q4
2007Q2
2006Q4
2006Q2
2005Q4
10.0
2005Q2
12.0
2004Q4
14.0
11.8
11.5
11.5
11.2
11.0
11.0
10.5
10.5
10.5
10.5
10.7
11.3
12.2
12.5
12.7
13.3
14.2
14.5
15.2
15.5
15.3
14.0
12.0
10.7
10.5
10.3
10.0
9.8
9.2
9.0
9.0
9.0
9.0
9.0
9.0
8.6
8.5
8.5
8.5
8.5
8.5
9.0
9.0
9.3
9.3
9.3
9.3
9.3
9.8
10.0
10.3
10.3
10.5
16.0
2004Q2
2003Q4
%
Interest Rates
Prime rate: quarterly
20.0
18.0
8.0
6.0
4.0
2.0
0.0
Rand/Dollar Exchange Rates
Rand/Dollar exchange rate
16.00
14.00
13.34
12.91
12.30
12.00
10.85
9.65
10.00
8.60
8.25 8.44
7.56
8.00
6.94
6.45 6.36
6.11
8.21
7.32 7.25
6.77 7.05
5.53
6.00
4.30
4.61
4.00
2.00
Source: South African Reserve Bank
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0.00
1996
Rand per USD
10.52
Weak/Strong Rand argument
• Weak Rand – typically benefits exporters, as it
makes SA exports cheaper for the rest of the
world to buy…
however
• It also increases inflation via higher prices paid
for imported goods and crude oil
Factors influencing Rand’s
appreciation/depreciation
• International conditions – e.g. risk aversion
toward emerging markets
• Strengthening of the dollar
• General investor sentiment
Unemployment
• Expressed as a percentage of total available workforce
• Two classifications of unemployment
Narrow/Strict & Expanded/Broad
• Four main types of unemployment:
Seasonal
Frictional
Cyclical
Structural
Unemployment
Unemployment Rates for South Africa
26
25.4
25.5
25.6
25.2
25.125.1
25
25.5
25
25
24.8
24.5
25.3
25.4
25.2
25
24.8
24.5
24.5
24.5
24.3
23.9
24.1
24
24.1
23.5
23.2
23
23
22.8
22.5
22
21.5
21.5
Source: StatsSA, QLFS
14Q4
14Q3
14Q2
14Q1
13Q4
13Q3
13Q2
13Q1
12Q4
12Q3
12Q2
12Q1
11Q4
11Q3
11Q2
11Q1
10Q4
10Q3
10Q2
10Q1
09Q4
09Q3
09Q2
09Q1
08Q4
21
08Q3
%
23.8
Employment Shares by sector
Agriculture; 4.4
Community
Services; 23.0
Mining; 2.8
Manufacturing; 11.5
Utilities; 0.7
Construction; 8.7
Finance; 13.4
Trade; 21.3
Transport; 6.2
Source: StatsSA, QLFS
Inequality
• Globally, the bottom half of the global population
owns less than 1% of total wealth (Credit Suisse:2014)
• In SA, the wealthiest 10% of SA’s population owns
over two thirds of the country’s assets
• SA falls into ‘very high’ income inequality
category alongside Brazil, India, Indonesia, Turkey
and Russia (Credit Suisse:2014)
Inequality in SA
Inequality indicators
2006
2009
2011
Gini Coefficient
0.72
0.70
0.69
Share of national
consumption of poorest
20% (per capita)
4.4%
4.4%
4.3%
Share of national
consumption of richest
20% (per capita)
64.1%
61.4%
61.3%
Source: Statistics South Africa (2014)
Government Policy
• How does government plan to reduce
inequality and improve growth?
• NDP
• MTSF
• NGP
• IPAP
• YETI
CONCLUSION
ECONOMETRIX | Leaders in Economic Insight