The world economy [May 1986]

Love, James and Boyle, Stephen and Draper, Paul and Harrigan, Frank and Heeley, John and Jenkins, Iain and Lockyer, Cliff and Love, Jim H and McGregor, Peter and McNicolI, Iain and Simpson, David and Walker, Jim (1986) The world economy [May 1986]. Quarterly Economic Commentary, 11 (4). pp. 3-6. ISSN 2046-5378

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Abstract

Developments in the first part of 1986 continue to be dominated by the sharp fall in the price of oil and the deceleration of the US economy. With the lack of agreement on pricing and output policy among OPEC members the outlook for oil markets remains uncertain. The present low oil prices provide benefits to oil - importing countries in the form of falls in industrial costs and improvements in trade balances. In the short-run it may have also helped trigger reductions in interest rates. The longer OPEC fails to exercise effective control over oil markets, the greater these benefits will be. However, while there is the resulting possibility of growth without the usual inflationary consequences, the world economy remains characterised by major imbalances.

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