Growth target still on track

SOUTH Africa's 7percent GDP growth is a target which the country aspires to and not the one projected as a forecast, Finance Minister Pravin Gordhan told Parliament yesterday.

Gordhan was responding to the IFP's Naren Singh on whether the country is on track to meet his recently projected growth of 7percent despite the public service strike.

He said although the strike caused disruptions, the Treasury did not expect its forecasts to have been affected.

"There will be a modest effect on consumption as workers who lost income during the strike cut back on spending, but the longer term impact of higher settlement on the fiscus will be much more serious as interest cost rise in response to higher government borrowing and the wage bill crowd out investment spending," he said

"If large real wage settlements for public servants are not matched with higher productivity, the outcome of the strike could also fuel inflationary pressures."