##hart and rogoff who have shown that unlike normal economic cycles or recessions, financial crises are protracted affairs. according to their research, conventional recessions involve a relatively quick return to normalcy, and generally the economy makes up the lost output and resumes its pre - recession growth trend within a year. a recession involving a financial crisis involves not only loss of output and employment but applies to debt, credit and the deleveraging, which takes much longer to work through. their work shows that the aftermath of severe financial crises share three main characteristics : that asset market collapses are deep and prolonged ; that such crises are associated with profound declines in output and employment, with the latter being particularly protracted ; and the real value of government debt tends to explode, on average almost doubling over a short period. this debt increase is apart from possible banking bailout costs, and is a result of an inevitable collapse in tax revenues as well as countercyclical expenditure policies. their findings also not only show that banking crises do not discriminate between emerging markets and developed markets – leading them to label such crises as equal opportunity menaces – but developed countries generally take much longer to recover than emerging markets, possibly due to greater wage flexibility in ( some ) emerging markets. normal cyclical downturns are often reinforced by tight monetary policies in response to an overheating economy and inflationary pressures, and the downturn can be effectively bis central bankers ’ speeches moderated by a reversal of the monetary policy stance. unfortunately we are not in a normal cyclical downturn, and the crisis cannot be solved through monetary policy alone. households in the advanced economies are still in the process of deleveraging and repairing their impaired balance sheets, and monetary policy can only help to a certain extent. in the context of low and falling house prices, declining equity prices and stubbornly high unemployment, rebuilding of household balance sheets may take a protracted period. the problem facing the us currently is this uncertainty relating to the self - sustainability of private sector consumption expenditure. at the start of the crisis, the gap left by the consumer, usually the main driver of growth, was filled in part by increased government expenditure. by the beginning of 2010 the recovery appeared to be underway and the consensus view was that by mid - 2010, the us economy would be on a self - sustaining recovery path, and the focus then was on exit strategies or normalization of both monetary and fiscal policies. by mid - 2010 it had become

an estimated 5, 3 per cent for the current fiscal year, the debt / gdp ratio has increased to 40, 3 per cent, one of the largest percentage increases when compared to other countries over the same period. a domestic growth slowdown would reduce tax revenues, and there are limits to which the debt / gdp ratio can expand without bringing its sustainability into question. any further fiscal stimuli would therefore need to ensure a focus on growth - enhancing expenditure. the weakness in south africa ’ s traditional trading partners underlines the need to seek new markets for manufactured exports in asia, and more particularly in africa. according to the imf, african economies, with the notable exception of south africa, displayed remarkable resilience during the crisis. although most countries experienced lower growth, mainly a result of lower global commodity prices, in general they managed to avoid recession. unlike south africa, the trade channel was less important because of the predominance of intraregional trade, and the stronger trade links with asia. since then, most sub - saharan african countries have returned pre - crisis growth rates, in line with those in developing asia. the imf estimates growth in ssa to average 5, 5 per cent in 2011 and 6 per cent in 2012. in addition to the above, a further reason for these positive outcomes is a recovery in commodity prices as well as improved policy environments recent developments in europe have important lessons for future moves towards economic integration in africa. following the european experience in its 40 year move towards monetary integration, it became conventional wisdom that the appropriate sequencing was for full trade integration to precede monetary integration. africa still has a multiplicity of, and in some instances overlapping regional trade blocs, and has some way to go to full trade integration. at the same time, african monetary integration initiatives are still going ahead in various forums, for example initiatives by sadc and the au, with different and overlapping timetables, and with inordinate haste in some instances. unfortunately the thinking behind these initiatives ignores the criteria for optimal currency areas, and focuses primarily on macroeconomic convergence criteria. an important lesson of the european crisis is that macroeconomic convergence is not enough. it is not sufficient for countries to comply with the initial conditions. it is now clear that necessary conditions include the need for institutions to ensure that these initial conditions are maintained. it is one thing to require countries to achieve certain debt ratios and fiscal deficit ceilings, for example, but are there appropriate mechanisms for ensuring that these guidelines or