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Chapter II: The World Economy

Published online by Cambridge University Press:  26 March 2020

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A major feature of the world economy in the first half of the year was the recovery of output in the United States from the depressed level to which it had been reduced in the latter part of 1970 by the strike at General Motors as well as by the underlying recession. As a result, the rate of economic growth in the industrial countries was faster than it had been in either half of last year; but it was probably still well below the normal rate of increase in their productive capacity, and unemployment was tending to rise in the great majority of cases. However, we expect the rate of growth to accelerate further in the next twelve months or so, giving an aggregate increase in real output in OECD countries of 3½-4 per cent in 1971 and perhaps 5½-6 per cent in 1972. This implies that pressure on resources will be increasing again, particularly as the recent rate of investment in industrial equipment (as well as in stocks) appears to have been low and may not improve much until there has been a recovery in profits.

Type
Articles
Information
National Institute Economic Review , Volume 57 , August 1971 , pp. 21 - 34
Copyright
Copyright © 1971 National Institute of Economic and Social Research

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References

Note (1) page 21 Throughout the chapter, the OECD countries are defined as excluding Australia (which in fact became a member on 7 June).

Note (2) page 21 These and other OECD forecasts mentioned in the chapter are taken from OECD, Economic Outlook, July 1971, no. 9.

Note (1) page 24 Presumably after adjustment for the effects of the abnormal weather. OECD estimates suggest that this may have contributed at least 1/2 per cent to the rise in GNP in the first half of the year.

Note (1) page 32 The basic dollar problem and the May crisis were dis cussed more fully in our February and May issues respectively.

Note (1) page 34 In the original context this seemed to mean when American products are no longer ‘at a disadvantage because of unfair exchange rates’, but subsequent glosses appear to have extended the prerequisites to ‘fair competition’ in other respects and a ‘fair share of the burden of defending freedom’.