World economic outlook a survey by the staff of the International Monetary Fund International Monetary Fund, Washington DC. April 1985, 268 pp.; April 1986, 268 pp.
| Author | K. W. S. Mackenzie |
| Date | 01 October 1987 |
| Published date | 01 October 1987 |
| DOI | http://doi.org/10.1002/pad.4230070408 |
404
Book
Reviews
(3)
the growth
in
national output must exceed population growth;
(4)
there must be an ability to obtain external resources needed to service the debt.
The rapid transformation of a deteriorating situation
in
some
of
the major (and more
affluent) debtor countries illustrates dramatically what can be done
to
retrieve an apparently
hopeless position. The problems of the really poor countries, mainly in sub-Saharan Africa,
may be more intractable-and could well be an entirely different story.
KENNETH MACKENZIE
WORLD
A
Survey
ECONOMIC OUTLOOK
by
the
Staff
of
the
International Monetary Fund
International Monetary Fund, Washington DC. April 1985, 268 pp.; April 1986, 268 pp.
These annual publications offer a useful commentary on recent economic activity throughout
the world, and consider possible short- and medium-term developments. The general
pattern is well established although the detail and emphasis vary from year to year as
circumstances change.
The main 1985 survey is divided into three sections: prospects and issues for the world
economy to 1990: a summary of the current situation and short-term prospects: and
medium-term future scenarios. All major issues are covered-output and employment;
inflation and interest rates; adjustments and debt. The present position and future prospects
for industrialized and developing countries respectively are examined with a broad brush.
Various consequences, based on both optimistic and pessimistic assumptions, are reached
in
the final section.
The 1986 survey brings the story up to date. It notes that progress
in
1985 was disappoint-
ing; and
in
spite
of
the stimulus provided by much lower oil prices the forecast for 1986
and the following years to 1991 is only marginally more optimistic than previous productions.
Prospects for lower inflation are regarded as better than for two decades, but relatively
little progress is expected in reducing the serious unemployment problem faced by many
countries.
There are important cautionary notes
in
both years. For example, the last paragraph
of
the main 1985 survey reminds
us
that any medium-term scenario exercise is
no
more
reliable than the assumptions on which
it
is based. Economic relationships, as well as the
policy settings, are subject to large and well-known uncertainties. For that reason quantitat-
ive material presented should be considered as of an illustrative character for a discussion
of
policy but should not be taken as a forecast
of
actual developments.
Similarly the 1986 survey,
in
discussing the 'scenario'
of
economic developments to
1991.
warns that 'a scenario is
in
no
sense a forecast;
it
represents an assessment
of
the conse-
quences of certain assumptions about exogenous economic conditions, given other assump-
tions about the behavioural relations that
link
these conditions
to
actual development. Only
to the extent that the assumptions are considered plausible, and the underlying "model"
is reasonable, can the scenario be considered a realistic projection. Even then, it must
be recognised that policies and conditions may change-perhaps
in
recognition
of
the
consequences
if
they do not-thus invalidating the projections of the scenario.'
The warnings are amply justified. In 1985
the
'only tenable assumption' was that
oil
prices would not fall below
$28
a barrel. In 1986 they are assumed
to
average $15 a barrel
from the second quarter of 1986 until the end of 1987 and then to be unchanged
in
real
terms throughout the remainder of the medium-term scenario period. However, 'given
current uncertainties in the oil market, this is clearly no more than a working hypothesis'.
In addition to the main surveys there are excellent background papers and comprehensive
statistical material. As source books alone they give a comprehensive bird's-eye view
of
recent developments in the world economy. The forecasts suffer from the flaws inherent
'
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