equities. in the year to date, the net amount of bonds and equities purchased by non - residents totals a record of more than r100 billion, compared r41 billion in the whole of last year. consequently, the current account deficit continued to be adequately financed. although we are hesitant to become too confident too soon, it also appears as if portfolio investments may be becoming a more stable source of financing, as emerging market assets become a more integrated part of global investment mandates, in particular those like south africa which have investment grade ratings. in 2004 and 2005 the south african economy grew at robust rates of 4. 8 and 5. 1 per cent respectively. this is in sharp contrast to the 3 per cent average annual growth experienced between 1994 and 2003. in the first two quarters of this year, the economy grew at revised annualised rates in excess of 5 per cent. although the third quarter growth slowed to 4. 7 per cent, this is still a very encouraging picture. according to the national treasury projections, a growth rate of 4. 4 per cent is forecast for next year, rising to 5. 3 per cent by 2009. growth is likely to be underpinned by higher infrastructure expenditure. the impact of this can already be seen in the strongly rising investment ratio. these higher growth rates have also had a positive impact on employment growth. according to the latest labour force survey, approximately 1. 2 million jobs were created over the 3 - year period to march 2006. this is good news indeed. this positive growth outlook suggests that with an appropriate policy environment, the aims of the accelerated and shared growth initiative for south africa ( asgisa ) can be achieved, that is, to maintain gdp growth at around 4. 5 per cent until 2009 and 6 per cent thereafter. fiscal policy has remained prudent, to the extent that for the first time ever, provision has been made for a budget surplus in the coming fiscal year. monetary policy will continue to play its role by providing a low inflation environment. 4. g - 20 developments i would like to turn briefly to our role in the g - 20 which south africa will chair in 2007. the g - 20 was established in 1999 as a forum where central bank governors and ministers of finance of developed and systemically important emerging and developing economies deliberate on issues relating to global economic and financial stability in support of global growth and development. the bank and the national treasury are currently making the necessary preparations for hosting and arranging meetings and

##ent to sudden changes in investor sentiment than they were at the time of the asian crisis in 1997 / 98. a major disappointment during 2006 was the inability of trade negotiators around the globe to conclude or, at least, continue with discussions in the doha round of the world trade organisation. there is no doubt that the major reason for the doha breakdown is to be found in disagreements over agricultural sector protection. the failure of these trade negotiations came as a major disappointment to developing countries in all regions, but the ultimate cost could be borne by both developed and developing nations. apart from the foregone opportunities for both developed and developing countries that a successful conclusion would have provided, of greater importance are the losses that all will be incurred if the world trading system is allowed to deteriorate with a reversion to protectionism. 3. domestic economic developments on the domestic front, 2006 has proved to be an eventful and challenging year, which has been influenced to a significant degree by the international developments that i have made mention to above. from a monetary policy perspective, we have continued to achieve our mandate, which is to keep cpix inflation within the target range of 3 - 6 per cent. inflation has been within this range since september 2003 which enabled us to reduce nominal interest rates by a total of 650 basis points between june 2003 and april 2005. in recent months the trend of inflation has been rising, and in october cpix inflation measured ( 5 % ) per cent compared to 3, 7 per cent in april of this year. furthermore our forecasts suggest that inflation could reach the 6 per cent level by the second quarter of next year. in response to the deteriorating inflation outlook, the monetary policy stance was adjusted in june of this year when we increased the repo rate by 50 basis points. the repo rate was increased further by 50 basis at each of the subsequent meetings in august and october. for much of the year, international oil price developments posed a major risk to inflation. the price of 95 octane petrol increased from r5, 49 per litre in january 2006 to peak at r7, 04 per litre in august. fortunately pressures on inflation from this source dissipated somewhat with the decline in the international oil prices and since august domestic petrol prices have declined by a total of r1, 07 per litre. despite this recent moderation, we still see the international oil price being vulnerable to global geo - political tensions, and therefore it continues to pose an upside risk to our inflation outlook