The international environment

Quaterly Bulletin 1999 Q1
Published on 01 March 1999
  • Japan’s economic performance continued to be weak in the final quarter of 1998, and external forecasts for growth in 1999 were revised down. But additional policy measures to promote recovery were implemented.
  • GDP growth in the United States was well above trend in 1998 Q3. But the headline growth figures masked an underlying slowdown in final domestic demand growth, and the manufacturing sector weakened markedly in Q3 and Q4.
  • Growth in the euro area was relatively strong in 1998 Q3 and consumer confidence remained high, though the outlook in recent months has become more mixed as business sentiment has weakened.
  • Forecasts for GDP growth in 1999 in the major overseas economies were generally revised down during 1998 Q4, largely reflecting the weaker economic outlook in Japan.
  • Inflation in the major industrial economies remained subdued in Q4, partly reflecting continued falls in internationally traded goods prices. Continued recent declines in world commodity prices may dampen inflationary pressures further in the short term.
  • The cuts in official interest rates in North America and Europe were followed by some strengthening of consumer confidence in those regions, and a rebound in equity prices.
  • Corporate and emerging market sovereign bond spreads over US Treasuries also narrowed in the period since the previous Quarterly Bulletin.
  • Financial markets remain volatile, and there are significant uncertainties about the outlook for some important emerging market economies in 1999, particularly Brazil.

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