Lukewarm GDP growth figures point to the biggest hole in last week's Budget

Statistics South Africa today announced that our economy grew at a lukewarm 2.9% in 2011. This is far below the rates achieved in comparable economies, and way below the 8% required to tackle unemployment and reduce poverty.

We are disappointed that Finance Minister Pravin Gordhan last week failed to use the National Budget to help accelerate growth. In fact, the lack of a growth narrative or plan is the biggest hole in last week's Budget.

In this regard, we recommend the Minister learns from our partners in BRICS, who have deliberately and specifically targeted high growth rates.

The Indian Finance Minister, Pranab Mukherjee, recently called GDP growth of 6.9% in India "disappointing" and said that his budget speech, which is due on March 16, would present "an inclusive growth-oriented budget ... providing a roadmap for achieving a higher growth trajectory". He announced that a variety of investor-friendly policies, measures that support small business and tax incentives for private sector expansion would be included in his budget. In comparison, Minister Gordhan's budget did relatively little to spur growth for small businesses.

The Brazilian Finance Minister, Guido Mantega, has emphasised the same message. In his budget speech on 15 February he said "We want to boost growth ... . In spite of difficulties around the world, with various countries slowing down, including some emerging nations, Brazil has the ability to grow faster. The budget we are implementing will make vigorous growth in Brazil possible." Unfortunately, Minister Gordhan did not introduce similar reforms to drive growth.

The bottom line is that we need to implement policies that put growth first. The Democratic Alliance's Alternative Budget proposed numerous proposals - including the youth wage subsidy, incentives for small business growth and targeted tax cuts - to help the private sector grow and employ more people. These are all in line with policies our BRICS partners are implementing to accelerate economic growth. The results are clear: we are lagging behind world growth and growing at half the rate of the rest of Africa and the other members of BRICS.

The time has come for our government to put growth first.

Statement issued by Tim Harris MP, DA Shadow Minister of Finance, February 28 2012

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