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World Economic Survey 1988

Current Trends and Policies in the World Economy

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The growth of gross world product in 1987 was slightly above 3 per cent. Short-term trends indicate that the world economy will continue to expand during the next two years, but at a lower rate. The period ahead will be one in which multilateral institutions and traditional economic relations will be pit on a major test.

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International finance, debt and instability

Three sets of financial events captured the attention of policy makers around the world in 1987: severe strains in the international strategy for managing developing country debt, the need for central banks to finance increased amounts of the current-account deficit of the United States, and the October crash in all the major stock markets of the world. These developments highlighted the instability of international financial relations in the late 1980s. As it turned out, however, none of the events erupted into a full-blown international crisis, but the potential for crisis remained.

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