BRENDAN BOYLE, Johannesburg | Thursday
PRESIDENT Thabo Mbeki said this week that the fight against inflation should not be pursued to the extent that the economy was driven into recession.
Asked at a news conference whether the pursuit of economic growth or the fight against inflation was more important, Mbeki said growth and inflation were closely linked.
”Clearly I think it would be wrong to say that in order to contain inflation I am prepared to go into recession. I don’t think that would be correct,” Mbeki said.
The Finance Ministry has given the Reserve Bank a mandate to reduce inflation from the current level of around 8% to between 3% and 6% by 2002.
The Reserve Bank’s targeted benchmark inflation measure known as CPIX, which eliminates the effect of changes in mortgage rates, rose by 8.1% year-on-year in September versus an 8.2% increase in August.
Labour and Communist partners of Mbeki’s ruling African National Congress have criticised the government recently for putting too much emphasis on the fight against inflation at the cost of economic growth.
South Africa’s economic growth is currently running at less than half of the 6.0% needed to make inroads against an apartheid legacy of high black unemployment and poverty.
Mbeki said the economy needed to be managed holistically in order to meet the challenges it faced.
”I do not think that the matter of the management of inflation would be such an overriding concern that you would be willing to put the economy into decline in order to achieve one economic target,” he said. – Reuters