General assessment

In addition to the usual review of developments in the major market economies this Assessment also considers some aspects of the economic changes occurring in Central and Eastern Europe, of which migration to West Germany is one dramatic symptom. As in West Germany, growth in Japan has remained buoyant while that of the United States has slowed somewhat, but inflation risks remained pervasive and outside the United States had been aggravated by the strength of the US dollar. The contribution of these developments to the rise in German interest rates at the beginning of October, which was followed by several other countries, including the United Kingdom, is considered. The process of adjustment to the earlier policy tightening here, by which final demand appears to have slowed more than output, with the accumulation of stocks accounting for both business borrowing and the continued large deficit on visible trade, is also examined.

General assessment