Johannesburg — THE government says SA can "defy" global economic trends on the domestic front if it focuses on investment that creates decent jobs, develops skills and boosts exports.

To achieve this goal, state policy makers said yesterday they would stick to the belief that official goals of halving unemployment and poverty by 2014 can be met.

Unveiling the state's medium- term strategic framework (MTSF), Minister in the Presidency for Planning Trevor Manuel said there would also have to be a refocus on the spending of all government departments to align spending priorities with the five-year MTSF.

The key was to ensure the poor did not bear the brunt of the downturn.Manuel said the strategy to create jobs would see the state seek to stimulate the car, chemical, metal fabrication, tourism, clothing and textile industries.

The framework details 10 priorities ranging from education and health to inclusive economic growth, rural development and food security. It will guide the government's programme of action and ministers will be expected to add flesh to the bones.

The government's ambitious plans have had to be tweaked as a result of the global financial meltdown, with Finance Minister Pravin Gordhan warning that the budget deficit would grow while SA was likely to see economic growth of only 2,5%-3,5% over the next couple of years.

Manuel told reporters in Pretoria that there would be close interaction between the budgeting process and the MTSF. This means the government is unlikely to take on board plans it cannot afford, a danger analysts have warned against.

Flanking Manuel was the government's head of policy, Joel Netshitenzhe, who said the framework had identified measures to stimulate the economy.

The cornerstone remains its R787bn public infrastructure development programme."If we do a proper focus we can defy the trends on the upside," he said.

While the framework calls for the status quo on inflation targeting, Manuel said it was not being pursued at the expense of growth, and should not be abandoned just because it was not being achieved.

"Price stability is a constitutional imperative. This has found resonance in the form of inflation targeting.... You don't abandon price stability if it is hard to attain...

"You don't ask the Reserve Bank to get back into the target come hell or high water, and destroy the economy and deepen the recession," the minister said.

Inflation has breached its 3%- 6% target range for more than two years, but that did not stop the Bank cutting lending rates.

Manuel said that the government remained committed to halving unemployment and poverty by 2014 even though the country was in its first recession in 17 years.

"The global economy is going to live through a very difficult period. The challenge that presents itself to us is that we can't continue with such high levels of unemployment as SA has," he said.

SA has one of the world's highest unemployment rates at 23,5%, and has already shed about 180000 jobs in the formal sector as a result of the global downturn. Economists say up to 400000 jobs might be lost this year.

The framework warns that there is a "real possibility" that the growth and employment gains of the past five years could be reversed, hence the need to respond promptly and effectively.

The country has drawn up a response to the global financial crisis agreed to by all social partners and the government.

Manuel denied yesterday the plan had ground to a halt, saying work was "ongoing", but "perhaps not as speedy as it should be".