, where elevated inflation has necessitated higher interest rates. while the domestic labour market also continues to recover gradually, an environment of weak growth implies that we may start seeing renewed job losses. furthermore, while nominal wages have shown a recovery, real incomes, however, remain constrained. nonetheless, we do expect household spending to remain supportive of the little growth that is projected for the year. this view is also corroborated by today's gdp report, which continued to show positive growth in household consumption. furthermore, although having moderated over recent quarters, growth in fixed investment showed some recovery in q4 and is also expected to contribute positively going into 2023. from this it is clear that the outlook for even the relatively low growth rates we project over the medium term, remains highly uncertain – in light of our own domestic constraints. the outlook also hinges on how quickly south africa's structural constraints can be addressed over the medium term. from an external accounts'perspective, south africa has benefitted from the generally high commodity prices that have prevailed over the past two years. these, however, have been moderating since the second half of 2022, in line with the slowdown in global growth, with further declines in south africa's commodity export prices expected in 2023. while the reopening of the chinese economy led to renewed strength for key commodities such as iron ore, platinum, copper and steel at the beginning of the year, this may not be sustained. the recovery in china's economy should mostly be led by services, while the commodity - intensive construction sector is unlikely to rebound at a fast pace. 3 / 5 bis - central bankers'speeches at the same time, the persistence of domestic electricity supply constraints implies that more businesses and households may be investing in alternative energy solutions, thereby driving up imports. this, balanced against projections of lower export volumes, equates to a deteriorated current account balance over the short to medium term. the role of the financial channel financial markets are another channel through which global conditions affect south africa. global growth, inflation and the pace of policy normalisation in advanced economies affect investor risk appetite, cross - border capital flows and, hence, the availability and cost of external funding. so far, considering the pace of policy normalisation in major economies and the extent to which'safe assets'have re - priced, the shock has not been strong by historical standards. capital outflows from emerging markets were moderate for most of 2022 and recovered in

the fourth quarter as global conditions improved. throughout 2022, the rand weakened by a mere 6. 5 % against the us dollar, initially helped by supportive terms of trade and south africa's current account surplus. but 2023 may still hold challenges on the financial front. if, as developments in february suggest, investors become more worried about global rates having to stay higher for longer, they may again shun riskier assets, and that includes south african bonds and equities. a similar outcome may occur if the consequence of policy normalisation is a deeper economic contraction than what markets currently discount. in both cases, south africa may face renewed capital outflows, and the deterioration in the current account over the past year means this could trigger new volatility in our asset prices. furthermore, if global investors become more selective in their choice of assets, south africa may suffer from its own idiosyncratic issues and various fiscal risks such as rising public sector wage costs and an increasing need for fiscal support for some of our stateowned companies. following the outbreak of covid - 19, unprecedented fiscal support in many economies has once again put sovereign debt sustainability at the forefront of investors'concerns. many emerging countries face a mix of elevated public debt from the pandemic as well as low growth. this, combined with the higher borrowing costs that currently prevail, means that attracting foreign capital can become more challenging. concluding remarks it has been quite a journey since the outbreak of the pandemic. lockdowns were instituted almost universally to stem the spread of the virus, while fiscal and monetary authorities around the world implemented unprecedented policy support for their economies. and as we navigated through those risk shocks and their inflationary impacts, the start of the war in ukraine in early 2022 presented a new set of challenges for economic policy around the globe. the impacts of both these shocks continue to linger and present a conundrum, for monetary policy especially. the global economy appears to be experiencing stagflationary conditions – with high inflation and low growth. these conditions create 4 / 5 bis - central bankers'speeches some tension between anti - inflation policies and pro - growth policies. that notwithstanding, global central banks have communicated their resolve to bring inflation back to target, as low and stable inflation is a prerequisite for high and sustainable growth. similarly, in south africa, we are also faced with high inflation and weak growth, and face similar policy challenges. however, weak growth