Address by Mr T.T. Mboweni, Governor of the South African Reserve Bank, Nieman Society of Southern Africa Annual Dinner, Cape Town.  1. INTRODUCTIONLadies and Gentlemen. I thank you for inviting me to speak at this, your annual dinner. I congratulate you as a group of individuals who have been recognized for your excellence. You have a responsibility to continue this pursuit of excellence. Indeed, this should be a guiding characteristic for all of us. The year 2001 can appropriately be described as a depressing year. It started with the sudden cut in the US Federal Funds rate, which marked the first official acknowledgement of the unexpectedly sharp and sudden downturn in the US economy. The slowdown of the US growth juggernaut after almost a decade of exceptional growth had a profound effect on most countries and regions. Initially there was a widespread belief that the euro area would be insulated from the fallout, given the high levels of intra-regional trade. It soon became clear that this optimism was misplaced, and that Europe would not replace the US as the locomotive for world growth. Not surprisingly, most emerging markets followed soon after. This was particularly the case in the technology-dependent Asian countries which were badly affected by the bursting of the Nasdaq bubble. The generalised slowdown was further exacerbated by the tragic events of September 11, which turned out to be the low point of a bad year. Although 2002 started off with many economies either in recession or close to it, the mood is one of cautious optimism that the worst of the global downturn is behind us. Growth forecasts are being continually revised by all the major fund managers and multilateral organisations. The latest forecast from the International Monetary Fund in December is for world growth of 2,4 per cent, the same as for 2001. However this figure was marked down significantly from the 3,5 per cent predicted in the October World Economic Outlook (WEO). The latter forecasts had been prepared before the September 11 events. Despite the significantly lower global growth forecast, these numbers do assume a recovery from the second half of the year. 2. INCREASED SYNCHRONISATION OF CYCLESThe current downturn has strongly reinforced the pivotal role of the US economy. Strong US growth had been instrumental in overcoming the Asian crisis of 1997/8. The story could have been very different had the US and Europe not been growing strongly at the time. In 2001 it was the locomotive itself that had stalled, resulting in a generalised world downturn. The nature of this downturn has implications for the future prospects for the world economy. Few analyses of the current downturn fail to mention the increased synchronicity of economic cycles across regions. In April 2001 the UNCTAD Trade and Development Report had argued that without a co-ordinated global policy response, the slowdown in the United States would produce a synchronous cyclical downturn in the world economy. In December the IMF World Economic Outlook remarked that a particularly disturbing feature of the current slowdown is its synchronicity across nearly all regions, "the most marked for at least two decades." The WEO attributes this partly to common shocks, (including the sharp oil price increases) and the bursting of the information technology bubble, both of which had a world-wide impact. Furthermore, increased international linkages, particularly in the financial and corporate sectors, have played an important role, and this is expected to be a continuing trend. Finally it is argued that the synchronicity of the downturn may also reflect delays in implementing structural reforms, notably in Japan and the euro area, resulting in these countries being less well placed to take up the slack when the long expansion in the United States came to an end.Although the downturn was strongly synchronised, there is less agreement as to whether this will apply to the recovery. There seems little doubt, though, that the US will lead the global upturn. Some analysts argue that although