SA, like much of the rest of the world, finds itself in an economic straitjacket. We have weathered the storm generated by the 2008 global financial crisis and subsequent recession fairly well, but have little left in reserve to implement the major socioeconomic reforms that are required to reverse the backlogs of our apartheid past.

That was the gist of Finance Minister Pravin Gordhan’s medium- term budget policy statement yesterday, a speech that contained little that was unexpected in the area of economic fundamentals but sent a clear message to the political leadership of the country: the margin for error is now exceedingly small, bad policy based on political expedience could have disastrous consequences, and there is a difference between productive investment and profligacy.

Far from this year being the year of job creation, as promised by President Jacob Zuma, SA has continued to shed jobs and Mr Gordhan’s speech explained why in the simplest of terms — the forecast for growth in gross domestic product has been pared back to 3.1 percent, less than half of the seven percent growth rate that is required to put a meaningful dent in the unemployment rate.

Alarmingly, while growth is expected to pick up gradually to about four percent by 2015, there seems little prospect of the rate getting close to seven percent as long as the developed world struggles to get on top of its debt problem. That has economic and political implications that do not augur well for social stability in SA, especially with the ruling party facing an electoral congress next year and the country set to go to the polls in 2014. African National Congress Youth League president Julius Malema is already seeking to tap into the rising frustration of SA’s army of unemployed and undereducated youths to advance his personal political agenda; a stagnant economy is his friend.

Mr Gordhan made the point that the domestic manufacturing and mining industries have failed to capitalise fully on the commodity price boom of recent years. The strength of the rand against the dollar, a consequence of extraordinarily expansive monetary policy in the US in particular, was part of the problem. But the National Treasury has identified other factors: "Energy constraints, inadequate transport capacity, and uncertainty in the regulatory environment have held back progress," Mr Gordhan said.

Few in the private sector will miss the fact that all three of these are, to a large extent, a function of administrative failure on the part of the government or its agencies. The energy constraints he refers to are a direct result of parastatal Eskom’s failure to build generation capacity, the mines have been unable to meet the global demand for coal and other commodities due to the limitations of Transnet’s rail infrastructure, and regulatory uncertainty is a direct governance issue.

To this list Mr Gordhan might have added the problem of soaring state expenditure and administered prices, which have played no small part in narrowing the options available to him to stimulate the economy. An out-of-control public service wage bill and sharply higher tariffs for services provided by state-owned enterprises are putting upward pressure on inflation at a time when the money could be spent far more productively to boost industry and the ability to cut interest rates would have been a useful weapon in the Reserve Bank’s arsenal.

Mr Zuma was handed the levers of power shortly after the global financial crisis but before the full force of the economic fallout was felt locally. He has spent much of the past two years dealing with internal party-political ructions, at the expense of forming and implementing sound economic policies and running an efficient administration. Monday’s Cabinet reshuffle may indicate that his focus has finally shifted to issues that matter for the country, not just the ruling party.

Mr Gordhan is too polite to put it so bluntly, but the note Mr Zuma needs to write to himself is no different from the one former US president Bill Clinton used to keep himself focused during his 1992 campaign: "It’s the economy, stupid".