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An analysis of the most important monthly and quarterly economic indicators reveals that an upper turning point in the South African business cycle was reached at the beginning of the third quarter of1974,and that the downward phase of the business cycle continued throughout the rest of the year under review. In interpreting the present economic situation, it is important to note that this downward phase of the business cycle did not represent an actual decline in economic activity,but a reduction in the growth rate to a level below that of the long-term trend.It is also noteworthy that the year under review coincided almost entirely with the downward phase of the business cycle, whereas the preceding year, with which the current year is customarily compared, had been in the upward phase of the business cycle. This means that although a meaningful comparison can be made between1974/75and1973/74,exceptionally marked changes in growth rates and other statistics were recorded between these two years.Significant changes in certain economic variables and policy measures also occurred in the course of the year under review.