the weaker euro and lower oil prices. the partial reversal of the oil price suggests that this impulse may be waning. it does however appear that the quantitative easing by the ecb is bearing fruit, but the question remains as to whether the region can sustain the recovery without this support. a question mark also remains regarding the possible contagion effect from the greek debt crisis. the market reaction to date suggests that this is more contained, unlike the more generalised crisis in 2011 when risk premia on all peripheral eurozone bonds widened significantly. the chinese economy continues to focus on rebalancing away from investment to domestic consumption. this has resulted in a downward revision of growth targets, but has also meant that demand for commodities is not as strong as it was previously. while a growth rate of 7 per cent would seem unattainable for south africa, it is relatively low by recent historical standards for china. bis central bankers ’ speeches domestic outlook the spill overs on to south africa from these developments are significant. the us impact is through the exchange rate and long term bond yields, which are highly correlated with those in the uk. the eurozone is an important destination for south africa ’ s manufactured exports, so a slow recovery is bad for the manufacturing sector, while the ( until recently ) weaker euro means that the competitive advantage from a weaker rand is undermined. although the african continent, which has been growing quite robustly, has emerged as one of the main destinations of south africa ’ s manufactured exports, there are downside risks to the continent ’ s growth prospects given the decline in oil and other commodity prices. the slowdown in china has had a marked impact on global commodity prices, resulting in a deterioration of south africa ’ s terms of trade, which was only reversed to some extent with the collapse of international oil prices since late last year, but even this windfall has reversed somewhat. so all in all we are indeed facing a challenging international environment. however, it would be wrong to suggest that the subdued outlook for the domestic economy is purely a function of global developments. domestic factors are also important, and some of them are of our own making. real gdp for the first quarter of this year slowed down to 1. 3 per cent compared to the 4. 1 per cent ( qqsa ) recorded for the final quarter of 2014. this is against the backdrop of the sluggish growth rate of 1, 5 per cent for 2014 and which is well below the bank ’

whole needs to have a greater understanding of the global financial crisis and its consequences for all of us. this requires greater interaction and a common purpose determining the appropriate course of action that we, as a nation, need to take to stave off the worst ravages of the crisis. we have experienced the most remarkable period of togetherness in the past month, built around soccer 2010 and being host to the world, both the hundreds of thousands who have come in person, and the millions who have watched on tv and other media. we need this togetherness and sense of what we can achieve to continue beyond the world cup, and to permeate other aspects of society. there also needs to be greater coordination and cooperation between policies. it is not possible to have loose monetary policy and loose fiscal policy and a weaker exchange rate. this will not translate into a depreciated real exchange rate. rather, it is a simple recipe for higher inflation. we need an appropriate mix or combination of both macroeconomic and microeconomic policies that will bring about higher productivity, higher growth and employment in a low inflation environment. today, what is clear is that central banks the world over have been given additional responsibilities, explicitly or implicitly. expectations are that central banks will, and can, deal with macro - prudential, micro - prudential, financial stability, crisis management, provision of liquidity and still meet their core responsibility, namely independent execution of monetary policy. financial stability crises build up over years, and what the prevailing global crisis has shown is that it is much harder to restore financial stability once it has been lost than previously anticipated. another lesson is that there is an increasing need for co - ordination and cooperation between central banks, governments and markets, within a sound regulatory environment and with a focus on maintaining systemic stability. in conclusion, what we are seeing is a bifurcated world where the developed countries face gradual de - leveraging with lower growth for longer in a more regulated environment, impacted upon by severe austerity measures and poor public finances. furthermore, the us faces increasingly large structural headwinds, including deteriorating public finances, while the eurozone is likely to see low inflation for some time to come. on the other hand, key emerging countries such as china, india and brazil, seem set to continue to grow and develop. our challenge is to ensure that south africa, with so much going for us, is one of these key emerging countries.