World economic problems - Governors speech at the International Industrial Conference

Quarterly Bulletin 1981 Q4
Published on 01 December 1981

The Governor begins by contrasting the recent performance of the world economy with the first two post-war decades. But the remedy for present ills is not root and branch reform: 'in our efforts to restore balance and direction to our economies, we have ... to start from where we are'. Early post-war success rested on various factors, all now eroded. Energy is no longer cheap; the rise of labour costs became more rapid; and the fixed exchange rate system was abandoned. The Governor points to the need for new efforts in these fields:

  • Greater economy in the use of dearer energy.
  • Striving to eradicate inflationary expectations-but not by accepting permanently lower growth. Success has gone to countries prepared to adapt in a flexible manner.
  • Greater stability in exchange rates, for which the Governor detects a growing desire. Difficult though it may be to achieve a measure of international understanding and agreement, we need to direct our minds to the problem and search for solutions that may only be attainable over time.

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