The World Economy in 1983: Marking Time
Article Summary and Author Biography
The performance of the world economy in 1983 is difficult to characterize. For the industrialized market economies--members of the Organization for Economic Cooperation and Development--it was the year of the long-awaited recovery after the second oil shock of 1979-80. World trade began to revive after two years of stagnation and decline. There was continuing good news about inflation in the OECD area. Business and especially consumer confidence improved. A major rupture in the world financial system was averted through effective, concerted crisis management led by the International Monetary Fund, whose role was further enhanced by an infusion of new resources. The heavily-indebted developing countries demonstrated considerable progress in external adjustment: indeed the largest Latin American debtors accomplished an amazing turnaround in trade performance.
Sylvia Ostry was the head of the Economics and Statistics Department of the OECD from January 1980 to September 1983. This article was written while the author was Senior Research Fellow at the Institute for Research on Public Policy in Ottawa, September to December 1983. In January 1984 she became Deputy Minister of International Trade and International Economic Coordination, Department of External Affairs, Ottawa. She is the author of Labour Economics and Labour Policy in Canada and numerous articles on economic policy. The views expressed in this article are her own.
The performance of the world economy in 1983 is difficult to characterize. For the industrialized market economies-members of the Organization for Economic Cooperation and Development-it was the year of the long-awaited recovery after the second oil shock of 1979-80. World trade began to revive after two years of stagnation and decline. There was continuing good news about inflation in the OECD area. Business and especially consumer confidence improved. A major rupture in the world financial system was averted through effective, concerted crisis management led by the International Monetary Fund, whose role was further enhanced by an infusion of new resources. The heavily-indebted developing countries demonstrated considerable progress in external adjustment: indeed the largest Latin American debtors accomplished an amazing turnaround in trade performance.
It was also a year when the seemingly inexorable rise in unemployment continued in Europe. The state of global indebtedness was (as usual) hard to assess statistically, but by year-end the sharp slowdown in international bank lending looked ominous in the light of the estimated needs of the major debtor countries, already showing signs of the political and social strain of adjustment. It was a year of new and renewed protectionism. In 1983 (like 1981 and 1982) the debate about deficits in the United States raged on and was unresolved. Interest rates, which had stopped falling by the spring, were gingerly nudged up, and wobbled irresolutely thereafter.
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