Moving beyond the crisis and finding a new sustainable growth path

The global crisis turned what might otherwise have been a mild slowdown in South Africa into a recession. However, thanks to moderately countercyclical macroeconomic policies, and in the absence of a banking crisis, South Africa was only about averagely affected by the global downturn. Given the losses in employment that ensued, pushing up the already very high unemployment rate, the short-term priority is to get the economy growing strongly on a sustainable basis. Once a private-sector-led recovery takes hold, fiscal policy should be tightened and monetary policy will have to protect the credibility of the inflation target in the face of stubbornly high inflation expectations. Beyond the crisis and its aftermath, South Africa needs to improve its trend growth performance to meet the material and social aspirations of its people. Among the areas to focus on to that end, this chapter picks out improving framework conditions for business, higher savings, increasing the contribution of exports to growth and strengthening efforts to tackle climate change.

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