World economic outlook, 1995-961

Abstract

Executive summary The underlying trends in the world economy are encouraging in many respects (Chart 1 and Table 1), with improved economic policies contributing importantly to the favorable performance and prospects of most countries. In most of the industrial world, economic expansion has now been under way for some time, with inflation in many cases remaining at its lowest level since the early 1960s. Preemptive tightening of monetary policy in 1994 has proven successful in dampening inflationary pressures in countries most advanced in the economic cycle. Low inflation and stronger efforts and commitments to contain budget (Tables 2 and 3) deficits have helped to reverse earlier increases in long-term interest rates while coordinated intervention in foreign exchange markets and changes in official interest rates, have helped to bring key exchange rates closer into line with fundamentals.