emerged that threaten to unsettle the global economy. during the early part of 2018, growing expectations of a faster pace of monetary tightening began to emerge, as the stronger pace of united states ( us ) growth was sustained and fiscal policy became more expansionary. growth in europe and japan has slowed, while the strengthening of the dollar has resulted in a reversal of capital flows from the emerging markets. in addition, concerns about the rise in protectionism have materialised, thus contributing to an escalation in trade tensions. concerns about a possible trade war have contributed to uncertainty about world trade, which could derail the global economic recovery that policymakers have been working hard at since the global financial crisis. we are already witnessing the adverse effects. in april, for example, we saw the largest decline in world trade since may 2015. 1 ‘ south africa ’ s future foreign policy ’, an article by nelson mandela in foreign affairs, vol. 72, no. 5, november / december 1993, african national congress page 2 of 6 trade wars are, in effect, a ‘ zero sum ’ game. small open economies suffer the most, as they rely on trade with the advanced economies and large economies - who are the price setters. addressing these risks at both country and global level requires strong institutional frameworks and a commitment to cooperation and coordination. the rising interconnectedness has widened the set of shared problems that are more effectively addressed through a global agenda. in this respect, collaboration is essential. this includes, among other things : reaffirming the open and rules - based multilateral trade system ; strengthening the global financial safety net ; addressing the excess external imbalances ; completing the financial regulatory reform agenda ; and reaching the 2030 sustainable development goals. these issues are central to the agendas of the group of twenty ( g20 ), the financial stability board, the bank for international settlements, the international monetary fund, and the world bank. south africa is an active participant in all these institutions. as you may be aware, the 10th brics2 summit, this time under south africa ’ s presidency, concluded a few days ago. its theme was ‘ brics in africa : collaboration for inclusive growth and shared prosperity in the fourth industrial revolution ’. since the beginning of 2018, the sarb has actively driven a number of initiatives among the brics central banks. this has included initiatives directed at enhancing the research capacity of the contingency reserve arrangement ( cra ), further work

negatively impacted on real economic activity in south africa. as a result the bank ’ s forecasts of growth in real gdp for 2012 and 2013 have been revised down. although confidence in the financial services sector has recovered strongly in 2009 and remains at high levels, confidence still has not returned to its pre - crisis level. the banking sector plays a key role in the stability of the south african financial system and remained stable during the first half of 2012 : • the sector remained adequately capitalised in terms of the current minimum regulatory requirements ; • banks continued to post healthy profitability numbers, supported by generally improved quality of assets ; • although the banking sector ’ s total unsecured gross credit exposure increased further in the first half of 2012, it remains only about 10 per cent of total gross credit exposure of the sector ; • the sector ’ s credit exposure to counterparties with legal jurisdiction in the giips countries ( greece, italy, ireland, portugal and spain ) remained insignificant with negligible exposure to sovereigns ; • draft 2 of the proposed amended regulations relating to banks, incorporating all basel iii related changes, was published in august in preparation of the adoption of basel iii as from 1 january 2013 in south africa. the life insurance industry maintained adequate capital buffers, and healthy increases in income contributed positively to confidence levels in the industry. the financial services board as the regulator of insurance companies is in the process of implementing the solvency assessment and management framework for the insurance sector. this framework is aimed at enhancing the soundness of domestic insurance companies and protecting policyholders through a risk - based solvency regime. the domestic bond market generally performed strongly in the first half of 2012, underpinned by south africa ’ s inclusion in citibank ’ s world government bond index. domestic financial markets, nevertheless remained vulnerable to global oil and food price shocks as well as to domestic concerns following turmoil in the labour market. as important clients of banks, conditions in the corporate and household sectors play an important role in gauging the stability of the financial system : • in the corporate sector much needed investment is still lacking, but recent data suggest a slight but broad based recovery in business confidence in the third quarter ; • the household sector ’ s appetite for debt seems to be increasing further, but data show that their savings portion of disposable income also increased, albeit only marginally ; • the declining trend in consumer confidence was borne out by a weakening consumer financial vulnerability index as well as a decline in the