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Chapter II. The World Economy
Published online by Cambridge University Press: 26 March 2020
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There is no doubt now that the turn of the year was also a turning-point for the world economy, the low point for OECD countries' aggregate industrial production coming in December. In all seven major countries total output rose in the first quarter (if the official seasonal adjustments are to be believed), whereas in all but Japan it had fallen in the final quarter of 1982. But an increasingly marked contrast has emerged between rapid recovery in North America, where economic growth in the US reached an annual rate of 8½ per cent in the second quarter, and what seems to be little better than stagnation after an early weather-assisted spurt in continental Western Europe. Japan and the UK occupy an intermediate position.
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- Copyright © 1983 National Institute of Economic and Social Research
References
note 1 in page 19 OECD, Economic Outlook 33, July 1983, p.35.
note 1 in page 22 A major problem in assessing the balance of payments of the US arises from the huge and rising statistical discrepancy in its accounts. In the past few years this figure has soared and in 1982 it registered a surplus of $41 billion. Part of this, no doubt, reflects unrecorded inflows of flight capital but measurement error in the current account is also possible.
Recently the world current account discrepancy has also grown dramatically (as described in recent articles in the Bank of England Quarterly Bulletin, the BIS Annual Report, the OECD Economic Outlook and the IMF World Economic Outlook), reaching $80-$100 billion in 1982 (and leading us to cease publishing a world current balance table in which we used to attempt an allocation of the discrepancy). One factor tending recently to increase the discrepancy has been the decline in world trade, which, with exports generally recorded ahead of imports, produced a deficit on recorded merchandise trade instead of the more normal surplus. Years of appreciation for the dollar may also affect the values of flows in dollar terms, and the reduction in oil inventories held at sea probably influenced recorded trade in 1982. A more permanent source of discrepancy is statistical undervaluation of service exports. Since the US is a particularly large service exporter, it is highly likely that its current account deficit is overstated.