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The World Economy

Section I. Recent economic developments

Published online by Cambridge University Press:  26 March 2020

Nigel Pain ,
Paul Ashworth ,
Dawn Holland ,
Florence Hubert  and
Dirk Willem te Velde
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Extract

The short-term economic outlook has improved significantly in nearly all parts of the world economy over the past year. Growth has continued at a rapid pace in the North American economies, helped by the renewed vigour in equity prices in recent months and further strong growth in labour productivity. GDP in the United States is estimated to have risen by over 4 per cent in 1999, for the third year in succession. We expect to see further growth of 3¾ per cent this year. The European Union economies have embarked on a cyclical upturn, helped by accommodative monetary policies and the impact of improved external demand.

Type
Articles
Information
National Institute Economic Review , Volume 171 , January 2000 , pp. 36 - 69
Copyright
Copyright © 2000 National Institute of Economic and Social Research

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References

Notes

1 For full details see Barrell, R. and Pain, N. (1998), ‘Developments in East Asia and their implications for the UK and Europe’, National Institute Economic Review, no. I63, pp. 64-7I.

2 See Box B in the July I999 Review (page 5I) for a description of the method employed.

3 Letting E denote employment, P denote population, L denote the labour force and U denote unemployment, we can write the employment-population rate (E/P) as:

E/P = LF/P ∗ (E/LF) = (LF/P) ∗ (I - U/LF) = Participation rate ∗ (I - unemployment rate)

For a summary of recent developments in the US labour market, see 20 Million Jobs: January 1993 - November 1999, a report by the Council of Economic Advisers and the Office of the Chief Economist, US Department of Labor, available at http://www.whitehouse.gov/WH/EOP/CEA/htmi/20miljobs.pdf For a detailed discussion of past trends, see Barrell, R., Lansbury, M., Morgan, J. and Pain, N. (1997), Job Creation In The US, Department of Employment Research Memorandum No. 47.

4 Net debt is however likely to remain well below that in Italy and Belgium, although above that of the other large OECD economies

5 The savings ratio we publish in the forecast tables incorporates the changes that have been made to the household accounts in accordance with the adoption of the ESA95 national accounts. One of the implications of the changes to the household sector has been a greater weight of households with a lower saving ratio, resulting in a drop in the savings ratio for I998 from II.9 on the old basis to I0.I on the new basis.

6 These are in addition to the Tax Relief Law I999/2000/2002 introducing income tax cuts, the ecological tax reform, the Law on Family Relief and the I999 Tax Adjustment Law, all of which have been discussed in earlier Reviews and have been incorporated in the present forecast.