Twelve-month growth in bank loans and advances to the private sector accelerated from 23,3 per cent in June 2006 to 24,6 per cent in July. Mortgage advances were a major contributor to this. Trade account data also indicate the continued underlying strength of domestic demand. South Africa’s trade deficit which had narrowed in June widened to R53,2 billion in July.
What remains very challenging is growth, which is too low, and it should be Europe’s priority to support it not only in countries with adjustment programmes but also in all other euro area countries. This cannot be achieved through additional public spending but through additional investment.