General review [July 1975]

Bell, David N. F. and McGilvray, James W. and Oswald, Andrew J. and Simpson, David R. F., Fraser of Allander Institute (1975) General review [July 1975]. Quarterly Economic Commentary, 1 (1). pp. 10-13. ISSN 0306-7866

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Events in the world economy since January 1974 have been dominated by the rise in the price of oil and other primary commodities which took place in 1973. The experience of almost ewery economy in the world since then has been characterised by adjustment to these events. When the quadrupling of the oil price took place at the end of 1973 it was widely believed that this would bring about an international monetary crisis, in consequence of huge trade surpluses being realised by the OPEC countries and corresponding deficits by the industrialised (OECD) countries. In fact, the very rapid rate of growth of imports of goods and services by OPEC countries coupled with a sharp decline in the demand for oil by the industrialised countries has led to a situation which the "petrodollar" surplus has been much less than had been feared. It is expected that by the end of 1975 the OECD countries taken together will have a collective balance of payments surplus on current account. World monetary institutions have shown themselves capable of coping with the problem of "re-cycling".