1986 World Economic Survey Forecasts Slow Growth and Falling Commodity Prices

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1986 World Economic Survey forecasts slow growth and falling commodity prices

So states the 1986 edition of theWorld Economic Survey (E/1986/59), one of the principal reports before the Economic and Social Council at its July session, in which it discussed development, finance, resources and related issues.

The 177-page text, prepared by theUnited Nations Department of International Economic and Social Affairs, begins with an overview of the world economy in 1985 and early 1986, as well as projections for the remainder of 1986 and 1987. Other chapters deal with fundamental issues in international trade policy; world payments imbalances; strengthening the international trading system; reform of the international monetary system; the relationship between capital formation and adjustment in developing, centrally planned and major industrial countries; and the critical economic situation in Africa.

According to the Survey, the worldeconomy in 1985 was characterized by modest expansion of production and "disappointingly slow growth" in international trade, after "significant but uneven" increases in 1984. Growth of world output slowed by nearly one third to 3.3 per cent, compared with 4.7 per cent in 1984. The increase in world trade was only 3.2 per cent, down from 9 per cent the year before.

In the developing countries, growthincreased slightly in 1985, to 2.4 per cent from 2 per cent in 1984. But 21 African countries--comprising 84 per cent of the region's population--as well as 18 countries in the Western hemisphere had a stagnant or declining gross domestic product (GDP) in 1985. "Living standards in much of developing Africa were worse than in 1960", the Survey reports.

Growth of the developed marketeconomies, which represent two thirds of world output and imports, slowed from 4.8 per cent in 1984 to 2.7 in 1985.

The material output of centrallyplanned economies dropped to 5.3 per cent from 6.2 per cent in 1984. China's strong growth in output moderated slightly, falling from 14.6 per cent in 1984 to 12.3 per cent in 1985.

Future trends

The Survey forecasts a modest accelerationof growth in many countries in 1986 and 1987. However, world output and trade are predicted to grow at rates far below those of previous decades. The Survey therefore calls for closer attention to the "crucial issues of underdevelopment and unemployment . . . than they tend to receive when concerns about payments and financial imbalances are so intense".

The Survey concludes that world economicperformance is likely to improve slightly in the short term, based on examination of "three key parameters"--interest rates, oil prices and the dollar's exchange rate. …