- Inflation has edged up again in some of the major economies. Monetary policy has once again been tightened in the United States and continental Europe, but not Japan.
- Economic activity in the major industrial countries was stronger than expected last year.
- The adjustment of external imbalances has stalled since the end of last year and may even have gone into reverse.
- There was some indication in the fourth quarter of a slowdown in output growth in the United Kingdom. Nevertheless, non-oil growth in 1988 was exceptionally strong, for the second year running.
- There are continued indications that the rise in interest rates has moderated the growth of demand in recent months. The rate of increase in house prices has fallen in several areas and consumer spending was subdued in the first quarter.
- Labour market pressures have continued to intensify in recent months and labour costs are seen as a more significant factor in inflation than was thought earlier.
- The current account deficit fell in the first quarter. The growth of imports is expected to moderate as higher interest rates affect consumer spending.
Published on
01 June 1989
Economic commentary