Fixed investment by the private business sector in the South African economy fell during 1998 relative to the previous year.  Recessionary conditions have contributed to this, but sustained high interest rates have been a major factor. The speculative activity against the SA Rand in the second quarter of 1998 resulted in the SA Reserve Bank increasing interest rates drastically under domestic economic circumstances which would otherwise have suggested a steady reduction in interest rates. Prime overdraft rate has decreased to significantly below its level prior to the exchange rate pressures (18.25%), and is close to 6% in real terms. Although it is expected that prime will not decrease significantly further during this cycle (possibly by 0.5%), recovery in investment is following on the reduction only gradually. Thus the year 2000 can still be expected to exhibit reasonably strong growth (around 3%), and this is likely to continue into 2001.