The international environment

The main news since the previous Quarterly Bulletin is:

● US GDP continued to grow strongly in the second quarter of 1997, but GDP fell sharply in Japan.

● Output growth in the major European countries has strengthened, but in Italy it remains significantly weaker than elsewhere in Europe. Growth in Japan, France and Germany is being driven by net exports. In sharp contrast with the United States, the unemployment rate in Germany, France and Italy remains well above 10% of the labour force.
● Narrow money growth in the major industrialised economies has continued to increase, but broad money growth has remained stable.

● Equity prices in general continued to grow strongly, though in Japan they have continued to fall.

● Measured inflation remains low throughout the major six overseas economies. In Europe, consumer price inflation rates have largely converged at slightly above 1.5%.

● The Bundesbank increased its repo rate in October, leading to increases in several other European policy interest rates. But in the United States and Japan, official interest rates were unchanged.

The international environment