emes may have to resort to less optimal policy options, which include implementing macro - prudential measures such as capital controls, and excessive reserve accumulation. the imf has also acknowledged that national policies alone may not be sufficient to address the adverse spillover effects in the global economy. 3 however, the nature and timing of such policy coordination is very much still an open question. this, in effect means that, while exogenous shocks are a distinct possibility, the nature and extent of these shocks are difficult to estimate and discern. international policy coordination, while clearly desirable, gets complicated by asynchronous monetary policies, which are informed by differing economic cycles. this is a challenge confronting monetary policy formulation and implementation in many emes currently, and is a reality we also face in south africa. 2. challenges and opportunities in south africa ’ s monetary policy environment as you are aware, the sarb ’ s monetary policy mandate is executed within a flexible inflation targeting framework. in essence, this implies that when inflation expectations are under control the sarb will tolerate temporary breaches of the upper target band of 6 per cent in the interests of containing short - term fluctuations in economic growth. the 0, 6 per cent contraction of the economy in the first quarter provided strong evidence of the impact of the protracted labour strike in the mining sector. while the end to the strike in the manufacturing sector which was announced at the end of july is to be welcomed, the impact of these strikes on the second quarter growth figures and over the longer - term are still to be ascertained. the recent quarterly labour force survey ( qlfs ) released by statistics south africa shows that the official unemployment rate has increased to 25, 5 per cent from the 25, 2 per cent registered for the first quarter of 2014. of particular concern is the decline of 24 000 formal sector jobs and the increase in the number of unemployed to 5, 2 million people which is the highest level since the inception of the qlfs in 2008. there is little doubt that job creation and reducing unemployment remains the single most important economic challenge confronting south african policy makers. imf, 2014. imf multilateral policy report : 2014 spillover report, imf, washington ( july 2014 ) bis central bankers ’ speeches the prospects for employment creation have also been adversely affected by the deterioration in the growth outlook. the bank ’ s most recent forecast, published at the time of our last mpc meeting, is that economic growth

economic outlook projects global inflation at 7. 0 % this year, down from the 2022 average of 8. 7 %. inflation is expected to further moderate to 4. 9 % in 2024. this decelerating trend is reflective of lower food and commodity prices, particularly oil, coupled with the gradual unwinding of supply constraints. although demand pressures have begun easing somewhat in response to global monetary and fiscal policy normalisation, core inflation remains high and persistent, risking prolonged target breaches in most economies, which could lead to some de - anchoring of inflation expectations. furthermore, the global growth outlook remains weak. following the steady recovery in trading - partner growth in 2021 of 7. 0 %, growth slowed to an estimated 3. 5 % last year. looking ahead, and in line with higher prevailing interest rates, the sarb expects trading - partner growth to average 2. 0 % this year, before rising gradually to 2. 6 % in 2024 and 3. 1 % in 2025. 2 in addition to slow global growth, rising interest rates have also triggered banking sector stresses in the united states ( us ) and europe – leading to tighter global credit conditions as markets and financial institutions readjust their portfolios. consequently, uncertainty around the path for the us federal reserve ’ s ( fed ) federal funds rate has increased over the near term. this has added to financial market volatility and the resulting ‘ risk - off sentiment ’ is impacting small open economies such as south africa. these bank stresses have also added to global policy uncertainty as the size and duration of these effects are still playing out, as can be seen in the recent failure of first republic bank at the beginning of may 2023. the domestic inflation landscape when i mentioned earlier some of the positive global developments over recent months, one of them has been a reduction in delivery lags and supply bottlenecks, which has contributed favourably to the inflation dynamics of some countries. unfortunately, this has yet to have a material impact on our domestic inflation, mainly due to idiosyncratic domestic factors. in fact, it is expected that our own domestic infrastructural bottlenecks will continue to exert upside pressure on the inflation outlook. in addition to the initial studies on the impact of load - shedding on growth, there is recognition and growing evidence that the country ’ s ongoing energy supply challenges are impacting on prices as well. the sarb now estimates that loadshedding will add 0