and debt servicing. equally important is the fact that debt buybacks have continued and net external debt reduction is still prevalent in many key emerging market countries. thus, overall, it would appear that emerging markets are far less susceptible to credit events than they may have been in the past. 5. south africa ’ s experience south african money markets were relatively unaffected by these events as our banking system had negligible exposure to the subprime market. liquidity conditions domestically remained healthy, and there was no need for the south african reserve bank to provide extra liquidity to markets. however, south african financial markets did not go unaffected. after trading below r6, 80 against the usd in july, the rand depreciated to over r7, 60 in mid - august. domestic bond yields increased and the alsi retreated quickly from the almost 30 000 level reached in july to below 26 000 in august. as calm returned to the markets, so the rand appreciated to below r7, 00 against the usd, the alsi ratcheted up gains above the 30 000 level, surpassing the record highs reached before the crisis, and government bond yields declined. as with many other emerging economies, south africa ’ s macroeconomic position places it in good stead. despite the turmoil in global financial markets, non - resident interest in south african assets remained positive. in fact, for the month of august, south africa witnessed record purchases of domestic bonds by non - residents. nonresident purchases of south african shares exceeded r10 billion. nonetheless, the sustainability of these inflows will depend in part on global liquidity conditions as well as domestic growth prospects. conditions in the local foreign exchange market also allowed for further accumulation of foreign exchange reserves. there does not appear to be any evidence at this stage that the recent turbulence in the international financial markets will have marked effects on the domestic growth outlook, although this will depend to some extent on the impact of these developments on the us growth performance. 6. implications for global economic growth whilst initially the developments in the financial markets appeared to be limited to a liquidity problem, they later transpired to present a credit problem as well. the big question now is to what extent these developments will affect the real economy. it seems logical that the us economy will bear the brunt of the damage of the sub - prime crisis. the tightening of lending standards and therefore the restrictions of credit extension to weaker households could exacerbate the housing downturn in the

crisis on graduate employment. there have been a number of anecdotal reports of the challenges facing graduates in finding employment. this has certainly been the case in europe and the uk, with reports of graduates having to take on temporary and relatively menial jobs. this not only affects their lifetime earnings, but also causes a ripple effect by depriving less skilled workers of access to these jobs. according to a recent survey conducted by the trendence institute in berlin, the number of applications european business school graduates expect to send out before they get their first job has increased from 28, 5 in 2002 to 38 ; and, on average, european graduates now expect to spend almost six months looking for a job. but in greece and spain, where unemployment is above 25 per cent and youth unemployment double that, the expectation is ten months. there are indications that, while the crisis has no doubt had a devastating effect on unskilled and even semi - skilled workers, south african graduates appear to have fared better than their european counterparts. recent research suggests that south african university graduates are relatively better off, but perhaps not surprisingly so. according to research conducted by hendrik van broekhuizen and servaas van der berg at stellenbosch university, and published by the center for development enterprise, the stock of south african university graduates more than doubled to about 1, 1 million between 1995 and 2012, but the broad unemployment rate of graduates has remained below 6 per cent. at the same bis central bankers ’ speeches time the labour force participation rate for graduates is around 90 per cent, compared with 59 per cent for people with only a school education. however, these figures hide a racial disparity. while the number of black graduates employed has trebled over this period, the unemployment rate of black graduates has been consistently higher than that of whites, although the gap has narrowed significantly over time. the above - mentioned study shows that in 2012 the unemployment rate of black graduates was 8, 6 per cent, compared with 3, 0 per cent for white graduates. this is still a significant difference, and i am sure we would find this compounded by gender bias if this was to be analysed. it is perhaps also worth noting that their research distinguishes between university graduates and other tertiary education. in the latter category, the experience of graduates has not been as positive, and may well reflect the state of the economy as well as some quality constraints. they show a general tendency for unemployment of graduates,