Johannesburg — FOR SA to achieve Finance Minister Pravin Gordhan's long-term economic growth target, the government should focus on allowing the private sector to flourish by spending on infrastructure, economist Rian le Roux said yesterday.

At a press conference last week, Mr Gordhan said the economy would need to grow at 7% annually for 20 years for it to reduce unemployment and poverty meaningfully.

Mr le Roux, chief economist at Old Mutual Investment Group, said the government needed to accept there were no "quick fixes" to reach the growth target by doing things such as keeping the currency artificially weak, nationalisation and abandoning inflation targeting.

"The government needs to put to rest any lingering investor fears over maintaining macroeconomic stability - reaffirming inflation targeting, rejecting nationalisation and committing to maintaining low budget deficits," he said.

The government, labour and business needed to maintain a strong anti-inflation focus and shift the policy mix towards a tighter fiscal policy. This entailed a lower budget deficit, and reduced spending and borrowing. Mr le Roux also called for a more expansionary monetary policy, such as increasing the money supply.

These measures would push economic growth higher without sparking inflationary pressures, he said. They would maintain lower interest rates, lower borrowing and investment costs for individuals and companies, as well as keep the currency weaker to encourage exports.

Shifting to social aspects, he said the government should "carefully and urgently" rethink labour laws that "inhibit job creation" and fix the education system to produce workers with skills and qualifications needed by the economy.

Econometrix economist Tony Twine said most private sector economists would question SA's ability to grow at 7% for six months, let alone 20 years, because obstacles to Mr Gordhan's dream included a lack of skills, insufficient national savings and a capital problem for infrastructure development.

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