The 1987 World Economy, The 1988 National Economy Through May, And Performance Of The U. S. Nonfuel Mineral Industry - World Economy In 1987

Real output expanded at a 3.0% rate worldwide in 1987, a slightly lower pace than the 3.2% rate in 1986. The decline was accounted for largely by slower growth in the U.S.S.R. and the East European countries, as well as in the developing countries (table 1). According to the International Monetary Fund, output of industrial countries output grew 3.1% and rose most strongly in Japan, the United Kingdom, and Canada (table 2). U.S. economic growth remained at 2.9%, the same as in 1986. Consumer and government spending declined in industrial countries, while gross fixed investment: rent increased. This increase in fixed investment expenditures could be attributed partly to lagged results of some 1986 developments: the fall in oil prices, declining interest rates, and exchange rate changes. The U.S. budget deficit, as well as the large external deficits and surpluses among major industrial countries, hindered further growth .2 A report from the Organization for Economic Cooperation and Development (OECD) indicates that the impact of the October stock market crash was short-lived because it hit economies that were growing strongly, anyway.3 The growth of output in the developing countries slowed in 1987; however, output declined in the fuel-exporting developing countries. These countries have been adversely affected by weakness in oil prices and the depreciation of the U.S. dollar. The weighted average of inflation rates in industrial countries--as measured by the [ ] GNP deflator, was 2.9% in 1987, down from 3.4% in 1986. Prices rose 3.0% in the United States, up from 2.6% the previous year. Inflation for 1988 is expected to remain slightly higher in the United States than in Japan and the Federal Republic of Germany because of recent exchange rates changes and the elimination of slack productive capacity and labor in the U.S. economy. Prices in developing countries as a whole rose more than 10 percentage points in 1987. Higher import prices, caused by