INTERACTIVE · OPEN-ECONOMY MODEL
IS-LM-FX for a small open economy
Three curves, calibrated to South Africa: IS (goods market), LM (money market), BP (balance of payments). AI capex demand shifts IS rightward; GPU import dependency widens the current-account gap and shifts BP downward. The new equilibrium is the answer to a question most strategy decks duck: what does an AI investment surge do to the rand?
IS — goods market
LM — money market
BP — balance of payments
Baseline (faded)
How to read it
AI capex demand shifts IS rightward: investment goods spending raises planned expenditure at every interest rate. If most of the AI hardware is imported (the GPU import share slider), the current account widens and BP shifts downward — sustainable equilibrium requires either a weaker rand, higher rates to attract capital flows, or both. SARB's monetary stance shifts LM: tightening pulls it left and up.
The Local GPU plant preset shows what changes if even 30% of AI hardware were assembled domestically: BP barely moves, the rand softens less, and rates can stay where the goods-market story warrants. This is the FinOps argument for industrial policy in one diagram.
Caveats
- Stylised. The slopes are illustrative, not estimated. Use it to clarify the direction of effects, not to predict basis points.
- Capital mobility is high but not perfect: BP is drawn downward-sloping (not flat) to reflect the SA risk premium.