The balance between continuity and change in South Africa over the next five years will be important to decision-makers in both the public and private sectors, says editor of "Zumanomics", Professor Raymond Parsons.

He says changing domestic and global circumstances present a clear and urgent choice if SA is to avoid a "low growth trap" in the years ahead.

"A possible growth rate of 3-3.5 percent beyond 2010 is not good enough," he says.

"Either strengthen public sector delivery, keeping government affordable and the tax burden reasonable, or face a continued failure to ensure delivery, leading to rising costs, reductions in services and greater financing challenges," says Parsons.

Parsons says that the South African economy could, and should, be made better by purposeful and effective government action, focusing more on the strength rather than the scope of the state.

"More creative cooperation between public and private sectors is necessary if delivery is to be improved."

Sides of the same coin

"We can truly say that GDP in South Africa is now not only the gross domestic product, but also the gross domestic politics – two sides of the same coin," says Parsons.

Parsons say the big question is what government can do in the face of global trade shrinking at its fastest pace in 80 years.

"Clearly governments must play a strong counter-cyclical role. Badly designed policies can nonetheless be self-defeating."

Emphasises Parsons: "We have become unaccustomed to dealing with a severe economic setback on the scale being currently experienced.

"Neither the global economy nor the SA economy are out of the woods yet."

Parsons points out that highly synchronised recessions are more protracted and severe than other recessions.

"Recoveries from these recessions are typically weak and we have an abnormal set of economic circumstances to confront," he concludes.

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