##polating further when structural factors supporting high volumes remain intact. terms of trade, including gold, weakened 6. 3 % from 2011q1 to 2014q2. excluding gold, the decrease is 7 %. physical volume production, iron, 2005q1 to 2014q2. bis central bankers ’ speeches it is also worth noting that south africa ’ s export markets continue to shift. in particular, the african market is becoming much more important for us. 3 europe the trajectory of europe remains an important determinant of global macroeconomic conditions and for south african outcomes. in recent years, weakness in the european economy has meant that there have been few real benefits to sa despite major rand depreciation against the euro. 4 as with the united states, we appear to be witnessing a seachange in european policy – although this could not possibly be described as normalisation. the question for south african monetary policy is whether these changes will offset us normalisation, fully, partially, or not at all. from a real economy perspective, a sustainably growing europe is crucial, but this may take considerable time to materialise. it is very hard to imagine europe returning to growth with its current institutional configuration and policy settings. the contradictions are too overwhelming. household consumption and investment across euro area has and will remain weak so long as banks remain in financial distress and property values and the housing markets are depressed. europe ’ s financial sector needs a clearing out of bad debt. the emphasis on fiscal austerity – clearly correct for over - indebted sovereigns – would, cumulated across europe, weigh too heavily on growth in the absence of any other demand stimulus and an exuberantly strong currency. germany has stood out for its strong growth in the midst of stagnation by its neighbours, but its longer - term interests cannot be served by endless stagnation in the euro area. the country seems too integral to the rest of europe, via positive and negative spillovers, to continue indefinitely on a real depreciation - based economic strategy. it cannot declare independence from europe. rather, europeans probably need to think of themselves less like we do these days – less as small open economies subjected to the vagaries of currency fluctuations and capital flows – and more like a continental super - economy if the region as a whole is to prosper. it is, perhaps, out of recognition that the old “ normal ” cannot go on that the ecb has moved resolutely in the

growth on the continent slowed significantly after 1998. average per capita gdp fell by almost 1 per cent from 1998 to 1999 while official aid to sub - saharan africa fell from us $ 32 per head in 1990 to us $ 19 by 1998. this occurred despite the improvements in some of these countries social and economic policies. the world bank gives this reason, and i quote : " the slowdown in growth was the result of regional and civil wars, poor governance in some countries, and serious external shocks such as the rapid hike in oil prices at the same time that export earnings from primary commodities collapsed. " the report cautions that growth needs to be above an annualised rate of 5 percent to prevent a rise in the number of poor people on the continent. some progress is evident. fourteen african countries have grown by an average 4 percent a year during the 1990s with a further 10 countries growing at rates above 3 percent a year. this report concludes : " africa ’ s future economic growth will depend less on exploiting its natural resources, which are being depleted and are subject to long - run price declines, and more on its labour skills and its ability to accelerate a demographic transition. " south africa is ranked as having a medium level of human development, according to the united nations development programme ( undp ). this is a similar level as found in countries such as jordan, sri lanka, turkey, indonesia and botswana. the human development index, compiled by the united nations development program, is a measure of what are termed " average achievements " in basic human development. the hdi measures a country ’ s development in terms of income, education levels and life expectancy. the value of the hdi ranges between 0 and 1. south africa ’ s hdi of 0, 628 as measured in 1998 is lower than canada ’ s 0, 932. it is slightly lower than all developing countries index of 0, 637 but higher than sub - saharan africa ’ s 0, 430. however, if we look at the scenario which factors aids into the results and compare it with a scenario in which the illness is not taken into account we get very different pictures and thus, logically, the situations will produce different development responses. in a " no aids " scenario, south africa ’ s human development index is estimated at 0, 647 for this year, but it falls to 0, 597 in an aids scenario. in 2005 the country ’ s hdi is estimated at 0, 65, and