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International Monetary Fund. Research Dept.
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Abstract

This paper highlights that there have been increasing signs of hesitancy in the pace of world economic expansion in the first half of 1985. In the United States, output growth declined to an average of 1 percent (at an annual rate) in the first two quarters of the year from 5.7 percent during 1984, and in other industrial countries, the pace of recovery was also generally subdued. Commodity prices fell significantly, thus weakening growth prospects in many developing countries.

© 1985 International Monetary Fund

International Standard Serial Numbers:

ISBN 0-939934-54-X

ISSN 0256-6877

Price: US$10.00 (US$6.00 to university libraries, faculty members, and students)

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Contents

  • Preface

  • World Economic Outlook: Current Situation and Prospects

    • Output, Employment, and Prices

      • Output

      • Employment and Unemployment

      • Costs and Prices

    • International Payments, Exchange Rates, and Debt

      • Exchange Market and Current Account Developments in Industrial Countries

      • Balance of Payments and Debt of Developing Countries

    • Stance of Policies

      • Industrial Countries

      • Developing Countries

  • Medium Term Scenarios

  • Policy Considerations

    • Economic Policies in the Current Situation

      • Industrial Countries

      • Developing Countries

    • Uncertainties in the Outlook

      • Risks of a Slowdown in Industrial Country Growth

      • The U.S. Fiscal Deficit

      • Interest and Exchange Rates

      • Oil Prices

      • Protectionism

      • Uncertainties and Interactions

    • Policy Responses to Uncertainty

      • Growth in Industrial Countries

      • Exchange Market Developments

      • Interest Rates

      • Slippages in Adjustment Efforts

    • Role of the Fund

  • Statistical Appendices

    • Introduction

      • Assumptions and Conventions

      • Classification of Countries

  • List of Tables in Statistical Appendix

    • Output and Employment (Tables 1-6)

    • Inflation (Tables 7-11)

    • Financial Policies (Tables 12-18)

    • Foreign Trade (Tables 19-28)

    • Current Account Transactions (Tables 29-37)

    • Current Account Financing (Tables 38-43)

    • External Debt and Debt Service (Tables 44-49)

    • Medium-Term Scenario (Table 50)

  • List of Tables

    • I. Revisions to the Projections: World Output, 1984-86

    • II. Stages in U.S. Recovery

    • III. Industrial Countries: Labor Force, Growth, Productivity, Employment, and Unemployment, 1967-86

    • IV. Exchange Rate Assumptions—Current World Economic Outlook Compared with April 1985 World Economic Outlook

  • List of Charts

    • 1. Developing Countries: Real GDP, 1980-86

    • 2. Major Industrial Countries: Unemployment, 1965-Second Quarter 1985

    • 3. Major Industrial Countries: Consumer Prices, 1979-August 1985

    • 4. Non-Oil Primary Commodity Prices, 1980-Second Quarter 1985

    • 5. Indices of Monthly Average U.S. Dollar and Effective Exchange Rates, January 1980-August 1985

    • 6. Major Industrial Countries: Payments Balances on Current Account, Including Official Transfers, 1980-Second Quarter 1985

    • 7. Volume of Trade of Non-Fuel Exporting Developing Countries with Industrial Countries, 1975-Second Quarter 1985

    • 8. Capital Importing Developing Countries: Sources and Uses of External Finance, 1978-86

    • 9. Capital Importing Countries—Selected Groups: Debt Service Payments and Reschedulings, 1983-86

    • 10. Six Major Industrial Countries: Target Ranges and Growth of Targeted Aggregates, 1984-85

    • 11. Five Major Industrial Countries: Interest Rates, 1980-August 85

Conventions and Symbols

A number of standard conventions have been employed in arriving at the projections in the report. It has been assumed that the actual exchange rates on July 22, 1985 will prevail throughout the balance of the period to end-1986; that “present” policies of national authorities will be maintained; and that the average price of oil will remain constant in U.S. dollar terms at its level of the end of July, 1985. These are, of course, working assumptions rather than forecasts, and the uncertainties surrounding them add to the margins of error that would in any event be involved in the report’s projections. The estimates and projections themselves are based on statistical information available up to and including September 20, 1985.

The following symbols have been used throughout this report:

… to indicate that data are not available;

— to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;

- between years or months (e.g., 1984-85 or January-June) to indicate the years or months covered, including the beginning and ending years or months;

/ between years (e.g., 1984/85) to indicate a crop or fiscal (financial) year.

“Billion” means a thousand million.

Minor discrepancies between constituent figures and totals are due to rounding.

* * *

It should be noted that the term “country” used in this report does not in all cases refer to a territorial entity that is a state as understood by international law and practice. The term also covers some territorial entities that are not states but for which statistical data are maintained and provided internationally on a separate and independent basis.

Preface

The projections and analysis contained in the World Economic Outlook are the product of a comprehensive interdepartmental review of world economic developments by the staff of the International Monetary Fund.

This review is carried out bi-annually and draws on the information the Fund staff gathers through its regular and special consultations with member countries as well as through its econometric modeling techniques.

The project is coordinated in the Research Department and draws on the specialized contributions of staff members in the Fund’s five Area Departments, together with those of staff in the Exchange and Trade Relations and Fiscal Affairs Departments.

An earlier version of the material in this report was the basis for a discussion of the world economic outlook by the Fund’s Executive Board on September 16, 1985. The present version has benefited from comments made during those discussions by Executive Directors. However, the descriptions of developments and policies that the report contains, as well as the projections for individual countries, are those of the Fund staff and should not necessarily be attributed to Executive Directors or their national authorities.

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