Address by Mr. T. T. Mboweni, Governor of the South African Reserve Bank, Southern African-German Chamber of Commerce and Industry.  1.  INTRODUCTIONGood afternoon ladies and gentlemen.  I thank you for inviting me here to address you today.  I stand before you at a rather uncertain global economic time.  But despite the world economic slowdown and the question marks over future growth prospects, trade between South Africa and Europe has been on the increase.  The Euro area has been less affected by the global slowdown, and South Africa, with its close ties to the region, has also been somewhat cushioned. South African imports from Europe rose by 20 per cent in April 2001 compared with April 2000.  South Africa’s exports to Europe rose by 34 per cent over the same period.  Likewise, South African-German economic relations have prospered over the past year.  In 2000, trade between South Africa and Germany reached an all time high with combined trade amounting to DM13,4 billion, or R50 billion at the current exchange rate.  South Africa’s imports from Germany increased by 19,9 per cent and South Africa’s exports to Germany rose by 23,2 per cent last year.  This was the fifth consecutive year where South African exports showed double-digit increases.  Semi-finished and chemical products were among the South African exports that showed significant increases.  The biggest growing import items were manufactured products such as vehicles and transport equipment as well as machinery and electric equipment.  Clearly, Germany remains one of South Africa’s significant trading partners and German companies continue to invest substantially in this country.  Chambers of Commerce and Industry undoubtedly enhance the strong bilateral and trade relations between the two countries, such as yourselves.I see that over the past four years you have extended your activities to the neighboring countries in the Southern African Development Community to include Botswana, Malawi, Namibia, Seychelles, Tanzania and Zambia, to name just a few.  By viewing the region as a whole, you share our broader vision of closer regional ties.  SADC, as a region, strives to achieve economic growth and development through sound economic policies and cooperation.  Within this the South African Reserve Bank plays a pivotal role.  It chairs the Committee of Central Bank Governors in SADC.  This Committee focuses on issues of financial policy and investment, development finance and macro-economic policies – important to boost the economic integration of the region.  Regional integration will give the region a stronger platform from which to participate in the global economy.  For the remainder of my time with you, I am going to give you some observations on the recent economic developments in South Africa.  This may give you an indication as to what the short-term holds.  But first let me return to the trends in the global economy.  Forecasts of slowing growth abound.  In the IMF’s world economic outlook published in April this year, it noted that prospects for global growth had weakened significantly since 2000.  However, of some comfort is that the IMF expects the slowdown to be short-lived.  The second half of the year should see a pick up in US economic activity, growth in Europe is expected to remain "reasonably robust", and recovery in Japan is forecast to resume next year.  Japan faces the challenge of addressing structural weaknesses, especially in its financial and corporate sectors. This global slowdown is bound to affect emerging market economies.  And with this in mind, we must be vigilant.  In this environment, commodity prices, upon which so many developing countries depend, are expected to weaken.  Indeed, the IMF notes, that prospects in these developing markets, like South Africa, depend on maintaining investor confidence.  However, the IMF acknowledges that these markets have made significant progress in reducing their external and financial sector weaknesses.  Many of them have moved towards sustainable exchange rate regimes and prudent debt and re