1984 was a much better year for the world economy than most observers, including ourselves, were expecting twelve months ago. Increases of 4 1/2–5 per cent in OECD countries' GDP and probably over 9 per cent in the volume of trade were the largest for at least eight years and far in excess of general expectations. At the same time the developing countries probably achieved GDP growth of the order of 3 1/2 per cent—easily their highest rate since 1979 despite continued restraint of imports, through which they achieved a substantial reduction in their balance of payments deficit on current account. Moreover, inflation, though probably rather faster than in 1983 in the developing countries, did not accelerate in the OECD area. Indeed, while its consumer prices rose, as in 1983, by 5-5 1/2 per cent, inflation measured by GDP deflators appears to have declined further, probably to the slowest rate since the ‘first oil shock’. Neither wage settlements nor commodity prices reacted as strongly as might have been expected to accelerated output growth. Indeed commodity prices weakened markedly during the summer.