Time to fire our 'policy bullets'

He mapped out in convincing detail why the economies of Europe, the US and Japan are heading for a contraction.

The eurozone was suffering from "chronic and persistent" problems, and efforts to fix them amounted to "mission impossible". All US economic indicators suggested a recession.

What was particularly disturbing was Roubini's view that the authorities in Europe and the US had run out of what he described as "policy bullets".

Fiscal policy was already in austerity mode, the ability to bail out financial institutions was limited, and there was weak domestic demand.

But Roubini's outlook was not all negative. He pointed to the rise of emerging markets, in particular those in Central Europe, Central Asia, the Middle East and sub-Saharan Africa.

He singled out East Africa, Kenya, Tanzania, Ghana and Nigeria.

South Africa, he said, was performing below its potential growth rate of 3.5%. But the good news is that the country is not out of "policy bullets" - and we do not have the debt constraints that have hamstrung developed economies.

But we do face a stark choice.

We can continue to increase consumption spending on welfare, or we can start to direct our attention to capital spending on the maintenance and improvement of infrastructure.

If we continue to increase our social welfare spending, we will end up borrowing money to finance it. Increasing interest payments will further reduce the pool of money available for capital expenditure.

Our economic growth rate will not improve unless we improve roads, railways, ports and electricity.

These are labour-intensive projects that will create work, thus reducing the welfare burden on the fiscus.

The government has failed to grasp the infrastructure nettle.

It adopts a statist, interventionist stance on matters such as the protection of information and the regulation of the salt content of food - but when a little statist fortitude is required to drive infrastructure spending, our rulers are strangely torpid.

The government needs to properly marshal its infrastructure spending if we are to benefit from our key strength - the richness of our resources, which emerging markets such as China and India require in increasing quantities.

This should be our key national priority.

We must strike while the emerging-market iron is hot.