This research explores the accuracy of economic forecasts by the Ministry of Finance of South Africa. The Ministry of Finance began to implement economic forecasts in 1997 in the time of Minister Trevor Manuel. These forecasts were presented every year since 1997 in the annual budget speech. The Minister of Finance (Pravin Gordhan) who succeeded Minister Manuel continued to deliver economic forecasts in the annual budget speech since 2010. The research focused on the period 1997 -2009 when Minister Manuel was the ruling political leader of National Treasury, although data for 2010 and beyond is included. A mixed-methods approach was followed to compare the annual forecasts with the actual and official statistics presented by the South African Reserve Bank and the Department of Statistics. Economic forecasts are important for the business sector, the financial sector and the government sector. These forecasts about economic indicators are used by the fiscal authority to provide information regarding the possible outcome of output, revenue and debt for the new budget year. These forecasts can also be used by various institutions for budget purposes, draft of financial contracts and planning of capital projects. Not all institutions can afford to manage a highly technical business unit that delivers economic forecasts run by various mathematical models and post graduate economic employees. The research demonstrated that the Ministerial forecasts for real growth and inflation can be used successfully.

The HIV/AIDS pandemic is one of South Africa's greatest challenges. Yet

Abstract

Read online:Scan this QR code with your smart phone or mobile device to read online.Increasing sophistication of exchange-traded fund (ETF) indexation methods required that a comparison be drawn between various methodologies to establish the benefits of such product innovations. A risk-adjusted performance evaluation of four pre-selected ETF indexation categories was conducted to establish how alternative ETFs compare to standard market capitalisation-weighted ETFs. The research methodology involved that fundamentally weighted, equally weighted and leveraged ETFs were compared to traditional market capitalisation-weighted ETFs on the basis of risk-adjusted performance measures. Using a sample of South African and American ETFs, several risk-adjusted performance measures were employed to assess the risk and return of each indexation category. Special emphasis was placed on the Omega ratio because of the unique interpretation of the return series distribution characteristics. Findings show that fundamentally weighted ETFs outperformed the other categories during an upward moving market when using standard risk-adjusted performance measures. Moreover, the Omega ratio analysis revealed inherent unsystematic risk in alternatively indexed ETFs, and ranked market capitalisation-weighted ETFs as the best performing category. Equal-weighted ETFs delivered consistently poor rankings, whilst leveraged ETFs exhibited a high level of risk associated with the amplified returns of this category. The study highlights that recent ETF developments bring unique risks that require cautious implementation of alternative ETFs into a portfolio.

The international financial crisis of 2008 had a major impact on capital flows from developed countries to BRICS countries. This study explores the reasons and impact of capital and exchange rate volatility that BRICS countries experienced. The rethinking of inflation theory to address the capital volatility which emerging economies face is of utmost importance. International investors invest in South Africa and other BRICS countries and are of an exogenous nature. The solution to reduce the negative impact of capital and exchange rate volatility lies with a different inflation management in each BRICS country and a reduced interest rate spectrum. The root causes of the capital volatility were investigated and not the symptomatic mechanisms to reduce the impact. This research focused on the South African inflation scenario. A new inflation index is proposed for South Africa to reduce the negative impact of capital volatility in the South African economy. The new index which excludes all exogenous factors will allow National Treasury to introduce a much lower inflation target for the monetary authority to manage.The interest rate differential of South Africa will narrow significantly relative to developed economies. The reduced interest spectrum will also bring other advantages, for example to stimulate real growth, to increase employment opportunities and to contribute towards a reduction in poverty.