The South African economy has recovered remarkably from the contagion effect of the financial turbulence in Asia and Russia. After being seriously affected by the volatility in global financial markets during the four months from May to August, tentative signs of a return to financial stability already began to appear during the last few months of 1998. The recovery of the financial sector was, however, attained at the cost of lower economic growth because of the restrictive measures that the authorities were forced to apply, the impact of a slowdown in international economic activity in many parts of the world and a slump in international commodity prices. Currently the economy seems to be poised for higher growth in production, provided that it is not again affected by setbacks in other countries.