challenging. growth forecasts for the euro area for the current year remain negative, while countries in the region face muted growth prospects. nonetheless, serbia ’ s country risk premium has declined, as a result of the easing of the euro area sovereign debt crisis and expansionary measures taken by the european central bank, the eu ’ s positive decision on serbia ’ s candidate status, and affirmation of the country ’ s credit rating. in fact, looking at the region, the sharpest fall in embi this year was registered for serbia. the dinar nonetheless weakened against the euro. depreciation pressures were driven by several factors : increased energy imports due to cold weather, lower exports, departure of the private owner from the smederevo steel plant, postponed review of the arrangement with the international monetary fund, increased government spending, and reduced capital inflow. bis central bankers ’ speeches * * * together with a spell of extremely cold weather in february, recessionary trends in the euro area and sluggish growth of the regional economies have led to a contraction in serbia ’ s economic activity in early 2012. according to preliminary estimates for the first quarter, gross domestic product fell by 0. 5 % from the previous quarter and by 1. 3 % from the same period last year. unfavourable weather conditions in february strained and even restricted electricity supply to a large number of enterprises. together with the suspension of operations of the smederevo steel plant, this pushed manufacturing down by as much as 12 %. however, as the production not only normalised in march, but also compensated in part for what was missed in february, manufacturing picked up by 19 %. the same factors had a decisive impact on exports, which followed a pattern similar to that of manufacturing in the first three months of 2012, while recording a mild fall at quarterly level. the steepest drop in exports was registered for base metals, chemicals and chemical products, while exports of agricultural products and electrical equipment increased. cold weather prompted an increase in imports of energy, and thereby, intermediate goods, pushing overall imports higher. on the other hand, imports of equipment and consumer goods recorded a decline. economic activity contracted in the first quarter. the negative contribution came from net exports, as well as lower private sector investment, signalled by a dip in imports of equipment and reduced construction activity, and adverse weather conditions. conversely, an upturn in retail trade points to a positive, though modest, contribution of household consumption to economic

- regulation are sufficient to ensure global welfare. we have seen that improvements are needed to preserve the safety of the global economic and financial system. these improvements concern rules of the game and procedures, but they also concern attitudes and underlying values. countries have to recognise the global impact of their policies and financial market players have to accept that the prime purpose of the financial sector is to serve the real economy. second, more than in the past, global governance must demonstrate a capacity to coordinate and decide extremely swiftly. a characteristic of the turbulences that intensified in september 2008 was the extreme rapidity in the succession of events as the crisis unfolded. the very high degree of interdependency between all economies calls for a much higher level of cooperation than in the past. third, the crisis has rightly accelerated the inclusion of emerging markets into the framework of global governance. but there are two reasons for this change. one is positive : the emerging economies are now economically and financially so important, and systemically so influential, that they must be fully involved in global governance. i hesitate to unveil the other reason that is not flattering for industrialised countries : they did not live up to their responsibilities prior to the crisis. now, the industrialised countries are called on to contribute to the stability and prosperity of the global economy within the new, more inclusive framework. looking ahead, we see that the global recovery has started to proceed at different speeds across regions, with a relatively modest recovery in advanced countries like the united states, japan and the euro area and a stronger expansion in the emerging economies. and yet, there is no time for complacency as recent tensions in financial markets have amply demonstrated. let me stress that it is important that the recovery should be measured in broader terms than the simple resumption of gdp growth and a return to sustainable fiscal positions : it means a full restoration of trust in our financial institutions ; it requires the healing of wounds inflicted by the irresponsible behaviour of some financial players on our societies and on the real economy ; and it requires renewed confidence that global governance is strong, broad and flexible enough to ensure global economic and financial stability and resilience in the future. thank you for your attention.