The economic background [March 1999]

Low, Kenneth and Ashcroft, Brian and Swales, Kim (1999) The economic background [March 1999]. Quarterly Economic Commentary, 24 (2). pp. 1-6. ISSN 0306-7866

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Over the past few months the global economy has weakened slightly due to strong deflationary pressures. The monetary authorities have reacted to this by reducing the repo rate by 75 basis points in die US, by 125 points in the UK and by approximately 80 basis points in Euroland. There is a lack of demand in the Euro Area, more so in France, Germany and Italy mat is particularly disconcerting. The Japanese economy remains a major problem with the recession likely to last longer than first thought. The US continues to grow strongly and mere is an absence of inflationary pressures thus assisting global economic activity. Nearly all economic forecasters have revised down their growth figures for the major overseas economies with the exception of the US. Financial markets remain volatile and there is still uncertainty over the Far East, the emerging market economies (particularly Brazil) and the Eastern European economies.