Growth, inflation and monetary policy

Abstract

Economic activity remained at a high level in 1974, despite the persistence of strong recessionary trends in the industrial countries during the year. The buoyant economic conditions in 1973 continued strongly into the first half of 1974, reflecting the lagged effects of favourable commodity prices and high export incomes on aggregate domestic demand. As a result, pressures on resources in particular segments of industry continued for the ter part of the year, despite a strong upsurge of imports. For the year as a whole, output in real terms in the domestic economy increased significantly by about 6 per cent, although the rate of growth in the first half-year was substantially higher. Towards the end of the year, there were some signs of increasing strains in the economy as the overhanging recession throughout the industrial countries began to adversely affect the tempo of economic activity.