MACROECONOMIC DEVELOPMENTS IN 19961.   Real economic activityOfficial statistics for the national accounts for the fourth quarter of 1996 are not yet available. Based on preliminary estimates, however, indications are that the economic growth rate as measured by the percentage change in gross domestic product failed to continue to accelerate as it did in 1993, 1994 and 1995. Growth was nevertheless still maintained at a level of about 3 per cent.Important changes took place in the relative contributions made by the various sectors of the economy to overall growth in 1996. There was a marked slow-down in the rate of expansion of activity in the secondary sectors, particularly in manufacturing, and also some slowdown in the tertiary (services) sectors. Overall growth of 3 per cent was made possible mainly because of a sharp recovery in total agricultural production after the adverse effects of the serious drought of 1995. A significant slowdown also occurred on the demand side of the economy where lower rates of increase were registered in private consumption expenditure, in gross domestic fixed investment, and in investment in inventories. These lower rates of expansion were partly neutralised by an acceleration in the consumption expenditure of general government, but the rate of increase in total domestic expenditure, which amounted to 6,5 per cent in 1994, and 5,2 per cent in 1995, came more in line with the rate of growth in total supply emanating from domestic production sources. 2. The balance of paymentsWith better balance between growth in demand and in supply, the current account of the balance of payments also improved last year. The current account in 1995 showed a deficit of just over R10 billion, and it is estimated, on the basis of available statistics, that the deficit for 1996 was well below this level. What is more important is to note that the deficit, calculated on a seasonally adjusted annualised basis, peaked at about R15 billion in the second quarter of 1996, before declining to R8 billion in the third quarter, and to a level of less than R5 billion in the fourth quarter of last year. The most important change in the financial situation last year was a substantial decline in the net inflow of capital from abroad. After a relatively large net inflow of about R20 billion in 1995, the net capital inflow subsided to less than R5 billion, which was not enough to cover the current account deficit over the calendar year 1996. The result was that the relatively low level of official gold and foreign exchange reserves came under some pressure, and a very vulnerable situation was exploited through a number of speculative attacks on the exchange rate of the rand. In the end, the exchange rate as measured in terms of the rand's average weighted value against a basket of the currencies of South Africa's major trading partners, depreciated by 22,7 per cent over the first ten months of the year, before the trend reversed itself. Over the past three months, that is from the end of October 1996 up to 7 February 1997, the effective nominal exchange rate of the rand appreciated again by 8,8 per cent. In January 1997, the total foreign reserves held by the Reserve Bank increased by R1,5 billion. 3.  Total employmentComprehensive employment statistics are only available up to the third quarter of 1996. It is disappointing, however, that total employment in the formal non-agricultural sectors declined further during the first nine months of last year. Total production per worker increased, but mainly because of the introduction of new technology and more capital intensive production processes. 4.  InflationThe average rate of increase in consumer prices over the twelve months of 1996 declined to 7,4 per cent, which was the lowest average rate of inflation in South Africa since 1972.This average rate for the year can be misleading, however, as important changes took place in the trend of inflation during the course of the year. The quarter-to-quarter rate of increase in the overall consumer price index on a seasonally adju