Rev up the engine
Oct 29th 2010, 9:57 by The Economist online | JOHANNESBURG
PRESIDENT Jacob Zuma’s government announced a “new growth path” this week, with the aim of creating 5m jobs over the next ten years. Since the official unemployment rate stands at over 25%—and at almost 37% if those too discouraged to go on looking for a job are included—this should indeed be a priority.
Sadly, however, there is not much new in the government’s plan. It amounts to little more than a long list of worthy suggestions (less corruption, more efficiency, greater cooperation with unions and so on). If conditions were right this might do it. But they are not.
Since the African National Congress (ANC) came to power in 1994, growth has averaged 3.2%, not fast enough to make a dent in the high unemployment rate. In the four years up to 2008, when the global financial crisis struck, South Africa did achieve growth of more than 5% on average. But since then it has slipped into its first recession in 17 years. Last year the economy shrank by 1.8%. It has since picked up again. In his mid-term budget speech on October 27th Pravin Gordhan, the finance minister, said he expected GDP to expand by 3% this year, up from his 2.3% forecast in February, rising to 4.4% by 2013.
The ANC says it hopes to cut unemployment to 15% over the coming decade. It will be lucky to reach 20%. Mr Gordhan, the finance minister, recently estimated that it would require economic growth of 7% a year for the next 20-30 years to make significant inroads into the ranks of the unemployed. In his mid-term budget speech, he lowered that estimated to 6% a year. That level of sustained growth has not been seen since the mid-1960s, and looks unlikely to return now.
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