Economic commentary

• Developments in the foreign exchange markets at the turn of the year were dominated by the strength of the deutschemark.
• Growth has slowed modestly in the United States and there are tentative indications of a slowdown in Japan and continental Europe, though growth there remains buoyant. Inflationary pressures remain, even though non-oil commodity prices are exerting a downward influence on input prices.
• Developments in Central Europe will have Jar-reaching economic implications, though in most cases restructuring will take a considerable time.
• Growth in the United Kingdom slowed further in the second half of last year and will be modest in 1990. Developments in the coming year depend to a large extent on how the company sector responds to its growing financial deficit.
• Inflation remains uncomfortably high and the recent weakness of sterling will have added to inflationary pressures.
• There were encouraging signs of an improvement in the trade balance in the fourth quarter.

Economic commentary