Currently the economy still has a negative output gap, which we estimate to be around 3,5 per cent, which is indicative of excess capacity in the economy. This means that the economy should be able to grow at rates in excess of potential without creating inflationary pressure until that output gap is closed.
South Africa’s patterns of employment strongly suggest that the unemployment rate is not simply cyclical in nature, and is in fact structural. Even if we manage to grow at higher levels, it will be difficult to absorb such vast numbers of unemployed, especially in the short to medium term.