Session 5: Mining and Economic Growth
In its latest World Economic Outlook, the IMF revised downward its growth forecast for most countries and for the world as a whole. This note briefly reviews some of the key revisions.
This briefing note considers three key questions about inflation targeting in South Africa, drawing on international experience as well as an assessment of the conceptual framework for monetary policy. First, does inflation in the low single digits promote development and growth? If not, raising interest rates at low rates of inflation may not be the optimal policy stance. Second, is inflation in South Africa a demand-side problem? If not, then raising interest rates may not be the most efficient and targeted policy tool to address the source of inflationary pressures (and may cultivate higher inflation in the future). Third, will reliance on a single monetary tool, the policy interest rate, successfully lower inflation and promote employment growth and development? If not, other tools should be sought.
Policy Brief prepared for TIPs by Stephanie Seguino, Professor, Department of Economics University of Vermont, USA, and SOAS, University of London.
Gross Domestic Product (GDP) is the main indicator used to measure economic activity. However, GDP is not designed to assess the welfare of a nation. This policy brief recommends the construction of a tailor-made sustainability indicator for South Africa, based on the Adjusted Net Savings methodology that would track the country's progress on a sustainable growth path, and also inform the trade-offs policymakers have to make.