systems and to prevent or minimize the impact of global financial crises. canada's financial system is recognized worldwide as being sound and efficient. to keep it that way, those of us charged with promoting financial stability will have to stay one step ahead of today's rapidly evolving financial markets. the bank of canada will continue to work closely with its domestic and foreign partners to strengthen financial stability here in canada and around the world. this completes my brief overview of the bank's role in promoting monetary and financial stability. i now propose to turn to the current economic situation. recent economic developments let me start with the external environment in which canada operates. the sharp easing in the pace of economic expansion in the united states has caused most forecasters to scale back their projections of world economic growth for 2001. compared with an average projection of just over 4 per cent last fall, we are now looking at something a little over 3 per cent — not spectacular, but still quite respectable. this forecast assumes that, after a weak first half, economic activity in the united states will strengthen in the second half. some of the recent u. s. data ( such as housing, motor vehicle sales, and industrial production ) indicate that the economic situation there may be stabilizing. the bank expects that, with stable or lower energy prices and with the inventory adjustment process well advanced, u. s. economic growth should strengthen during the second half of the year. the reductions in interest rates by the u. s. federal reserve should underpin this recovery. but of course, its exact timing and precise strength are difficult to predict. here in canada, our economy was, by last summer, beginning to press against capacity limits. thus, somewhat lower growth was anticipated for 2001. but, with the abrupt slowing of the u. s. economy, growth in canada began to slow significantly in the final quarter of 2000. and by mid - 2001, the canadian economy will probably be operating somewhat below potential — that is to say, below what it is capable of producing over the long run without adding to inflation pressures. this slowing in economic activity has not been uniform. some high - profile sectors such as the automotive, electronics, and telecommunications equipment industries have been affected the most. and the prices for many non - energy commodities have been weak. it is this weakness that has had an important effect here in british columbia. but to keep a sense of perspective, let us not forget that there is still considerable underlying strength in other areas of

have also decided to formally make an inflation target the nominal anchor of turkey ’ s monetary policy beginning in the fourth quarter of this year. the effects of the mexican, asian and russian crises spread from one country to another in a process commonly known as contagion. but in this case, the available evidence indicates no broad - based contagion from argentina and turkey to emerging markets in general at this stage. however, according to the imf, the potential for broader - based contagion still remains. concerns about argentina did spill over into the region, notably to brazil, which is also suffering from domestic difficulties. i once again appeal to our markets to judge south africa on its performance and not on the basis of emerging market perception. and once again, my heartfelt thanks to you.