Trade and Development Report 1992

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The world economy has been suffering its most severe recession since the Second World War. Production has fallen in the United States and flattened in Japan. Western Europe is stagnating: the boost provided by German unification has petered out, while high interest rates remain. Growth has picked up in Latin America, but remains slow there and in other developing regions, other than parts of Asia. Central and Eastern Europe are suffering a precipitous fall in living standards; the transition process is proving much more painful than anticipated. Overall, signs of improvement are scant.



Regional performance and short-term prospects

In 1991 per capita GDP in Latin America rose for the first time since 1987. In contrast to the closing years of the 1980s, when vigorous export expansion failed to spark a concomitant improvement in GDP growth, the resumption of growth in 1991 took place in spite of reduced export purchasing power. While the earlier failure to grow was due in part to internal economic disequilibria engendered by the debt crisis, in 1991 import capacity of the region was considerably enhanced as a result of lower debt service payments, on account of lower interest rates, and of substantial net capital inflows. In addition, lower debt payments provided direct relief to budgets and indirectly benefited the economy at large. In many countries, resumed growth was also accompanied by markedly smaller increases in the price level.


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