At the current level of potential GDP growth – which the SARB estimates to be between 1.0% and 1.4% over the next three years – the economy is not able to generate real per capita income gains on a sustained basis.
This is because population growth is currently at about 1.6% per year.4 Achieving a more equitable distribution of income is particularly challenging if it is not possible to grow the economy faster than the rate of population growth. In such an environment, difficult conversations about redistribution are unavoidable.