Economic activity has been fairly strong in 2007 through the fourth quarter, against the backdrop of rising crude oil prices (reaching the US$100 per barrel mark) and consequent pass-through to domestic prices and increases in utility tariffs, ; and the lingering uncertainties surrounding the turmoil in financial markets and the US sub-prime crisis. The energy crisis and load-shedding also influenced the economic environment.

Gross Domestic Product (GDP) growth remained robust and the economy resilient to the energy supply interruptions and load shedding, and rising fuel prices associated with the increases in oil prices on the international market. The indications are that GDP growth has eased to 6.4 percent for the year, a slight mark down from an initial forecast of 6.5 percent.

The latest data show that headline inflation, based on the Consumer Price Index (CPI) eased to 10.1 percent in July from 10.7 percent in June, after increases in the two preceding months to 11.0 percent in May; returning the inflation rate to the level recorded at the end of the first quarter of the year (10.2 percent in March 2007). Non-food price inflation also turned in at 10.1 percent in July, compared with 11.3 percent in June, while food price inflation was at 10.2 percent in July edging up from 9.9 percent in June.

On the global front, we are beginning to see signs of stabilization and recovery with forecasts of slightly higher growth following a period of turbulence which characterized the first half of the year. The anxiety of markets and policymakers is giving way to some kind of hope, greater confidence, and positive expectations, and cautious optimism about global recovery and restoration of financial stability.