ian plenderleith : five big issues in the economic field speech by mr ian plenderleith, deputy governor of the south african reserve bank, to the actsa ( action for southern africa ) corporate and professional dinner, johannesburg, 2 june 2005. * * * visitors to south africa are encouraged to go on safari and see “ the big five ”. the big five are, indeed, awesome in the wild and a memorable sight. but i have always regarded the notion that visitors can see just the big five, and then go home feeling they have covered the ground, as distinctly sub - optimal marketing. any score card that leaves out, for example, the mute grace of the giraffe, or the sheer brute force of the hippopotamus, or - my personal favourite - the nimble elegance of the warthog, does not begin to do justice to the diversity of wildlife in south africa ; and if we also add a few of the rarer sights, like perhaps wild dogs and cheetah, we would encourage visitors to stay longer and add yet more to our tourist earnings. the big five are not, however, only to be found in the bush. in the economic field, too, we have for the past decade been determinedly and assiduously tracking a different sort of big five, representing the key elements we need to nurture to enable our economy to achieve higher and rising levels of sustainable growth in output and in employment and hence in living standards for all the people of south africa. i want tonight briefly to point out these economic big five to you and to suggest that, after years of carefully stalking the spoor, we are now on track and in sight of the big five and well placed to enjoy the continuing benefit of their company. what are these big five, in the economic field? first, the economy as a whole continues to demonstrate vigorous and sustained growth. we have in fact achieved continuous positive growth in output for the past 26 consecutive quarters - some six and half years. that is a remarkable track record of cumulative growth. more recently, we have seen growth accelerate, from 3 percent or just over in the past few years to 3. 7 percent last year and continuing to run close to that level on the first quarter gdp data released just this week. the economy appears to have moved up in the past two years onto a higher growth trajectory which, if it can be sustained, is extremely good news. secondly, there are good

this “ window of opportunity ” to implement the necessary strengthening of their public finances and to improve their competitiveness? will credit to non - financial entities start flowing more strongly again now that banks have been able to secure more solid financing? will authorities manage to implement fiscal austerity measures without unduly damaging growth prospects in europe? and then there is the issue of whether geopolitics will push oil to levels that threaten the fragile global recovery. let me briefly add that europe is not the only source of risk, as there are, e. g., major fiscal challenges in us, which could come to a head early next year. the jury is still out on these questions, but investor concerns seem to be rising again, especially with respect to the credibility of fiscal consolidation plans in europe. at the most recent meeting of g20 finance ministers and central bank governors last month, there was some optimism that tail risks faced by the global economy had started to recede. however, the persistence of downside growth risks and the need for on - going structural reform and global rebalancing were also highlighted as needing to be kept firmly on the g20 agenda. 3. implications for south africa as has been the case since the beginning of the financial crisis, south africa has not been immune to these fluctuations in international markets. our banking system is solid and well - capitalized, our financial markets ( including the interbank market ) have not experienced any problems that required official intervention, and our external and public finance situation looks far more manageable than in many developed economies. yet the country ’ s strong trade links with the european union ; its reliance on commodity exports ; and its liquid and sophisticated financial markets provide as many channels for the transmission of external shocks. the past year ’ s fluctuations in domestic equities, bonds and the exchange rate, as well as the sensitivity of local gdp to the global cycle, bear testimony to this relationship. supply - side problems undermined south african growth in 2011. some of these were external, including disruptions to the automobile sector ’ s supply chain following the devastation in japan. others were internal – and i refer here to safety - related interruptions in mining and industrial action in both the mining and manufacturing sectors. the consequence, however, was that gdp growth only averaged 3, 1 per cent in 2011, a lesser increase than what the reserve bank had been projecting this time last year. admittedly, the latter half of the year brought some good news on