ultimately the cost of living for all south africans. 11 encouragingly, we are beginning to see some traction on reforms, particularly in the energy sector. while some strides have been made in removing structural barriers to entry for independent energy producers, the full benefits of these interventions will mostly materialise in the medium to long term. the sarb sees both potential growth 9 the budget deficit rose to 10 % of gdp in 2020 / 21 ‒ one of the highest in emerging markets. the sarb lowered the repo rate to 3. 50 % during the pandemic ‒ its lowest level in over 50 years. 10 the cumulative electricity shed from the grid in the first six months of 2023 amounted to just over 15 000 gwh, which is significantly higher than the 11 770 gwh shed in the whole of 2022. load - shedding is estimated to have contributed 0. 5 percentage points to domestic inflation this year. and output growth slightly higher over the medium term. 12 meanwhile, private sector investment in alternative energy is providing a welcome boost to fixed capital formation and is supporting domestic economic activity, particularly in the construction industry. investments in back - up energy solutions have cushioned business operations from the impacts of load - shedding and partly explain the resilience we see in the economy. despite high inflation eroding real incomes, household spending has grown over the past year, although its contribution to overall economic growth has been declining. high inflation and rising interest rates, alongside slower employment recovery and declining real disposable income, continue to weigh on consumer confidence, raising the prospect of further slowdowns in household consumption growth. 13, 14 slower domestic growth ultimately reflects in weaker fiscal numbers, especially so given the reversal in revenue windfalls. the current trajectory of the fiscus is characterised by elevated budget deficits and rising public debt levels. this has contributed to a higher risk premium, driving up the cost of borrowing, and depreciating the rand exchange rate, thereby raising exchange rate pass - through inflation. fiscal consolidation can significantly lower fiscal risk, and this should support macroeconomic stability and ultimately economic growth. conclusion finally, let me conclude by recommitting the sarb to the challenge posed by our constitution. our job is to contain inflation in the interests of balanced and sustainable growth. the sarb will continue to exercise its mandate to guide inflation and inflation expectations closer to the midpoint of the target band which, in turn, keeps demand and supply in the economy

the foreign exchange markets, an increase in the money market shortage and upward pressure on interest rates. understandably, the new situation created great uncertainty in the financial markets and initiated an ongoing debate on what the consequences of these developments would be for south africa. there is no doubt that major adjustments will be necessary to restore equilibrium in the economies of the affected east asian countries. some of the countries, for example thailand, are already biting the bullet and are now implementing imf austerity programmes for painful macroeconomic adjustments that cannot be avoided. it will take time to restore confidence and to put a new tiger in the tanks of those countries that are perhaps now suffering from growth fatigue. it remains to be seen to what extent the unavoidable slow - down in real economic activity of the east asian region will affect global economic developments over the next year. the south african economic conditions will obviously also be influenced by these developments, although our direct trade with the affected economies is relatively small. we have perhaps a greater interest in the early recovery of the ailing japanese economy, which can now also be delayed because of adverse influences of conditions in the economies of the tired tigers of the region. south africa has also recently been affected by the decline in the gold price, a development which is of course not completely unrelated to the developments in the foreign exchange and capital markets. there may be some disappointment that on this occasion international investors looking for value in a flight from securities opted for the us dollar, and not for gold. once again, the possible adverse effects of the decline in the gold price on the south african balance of payments or the exchange rate of the rand should not be exaggerated. it holds a much greater social problem if one or two gold mines should be forced to close and many mine workers should be retrenched because of the low gold price. monetary policy must obviously even in the short term be adapted to major changes in underlying conditions, and must take account of the recent dramatic movements in the foreign exchange and financial markets. the basic fundamentals in south africa, however, remain sound and well - balanced. should these external disruptions settle down soon, and should the events of the past few months in east asia not have too much of a ripple effect on the overall global economic growth prospects for 1998, south africa can look forward to a period of steady and sound economic recovery next year. 5. implications for 1998 the macroeconomic consolidation process in the south african business cycle has been completed to an important extent :