The world economy and the monetary system

Abstract

During the past year the recession in the world economy deepened and deteriorated into a depression. Decelerating growth gave way to a decline in real production. The industrial countries, which had recorded average annual growth rates of 5% during the ten years from 1962 to 1972, ceased to show any growth in 1974 and swung into decline at an annual rate of close on 2% in 1975, falling to alow point of 5% in the course of the year. Some recovery was discernible during the second half of 1975 particularly in the United States, so that an average growth rate of 4.5% is to be expected in the current year. It may therefore be inferred that the most serious economic recession since the Second World War has come to an end. Some qualification is required, however, since the inference is valid only in respect of the volume of production. The position in regard to two other important yardsticks is not quite so favourable. For instance, in the last period of economic recession unemployment disappeared quite rapidly as production recovered, but there is reason to fear that the present high unemployment figures will persist for a much longer period. Moreover, the currency depreciation which set in at the beginning of the 1970s has not on this occasion ceased with the unfavourable economic conditions.