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World Economy Forecast Post-Mortems: 1978-82

Published online by Cambridge University Press:  26 March 2020

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Extract

This note continues a series of articles by tabulating for the past five years actuals and the National Institute's one-year forecasts for the world economy as published each February. For the more important variables results during this period are compared with those achieved in earlier groups of years, with particular reference to the two periods in which steep rises in the price of oil were followed by recession. In addition, account is taken of the performance of February forecasts for two years ahead, which first appeared in the Review in 1979.

Type
Articles
Information
National Institute Economic Review , Volume 104 , May 1983 , pp. 32 - 37
Copyright
Copyright © 1983 National Institute of Economic and Social Research

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References

Note (1) page 32 This note was prepared by Miss K. M. Barker of the National Institute (using estimates subsequently revised in a few cases).

Note (2) page 32 These articles appeared successively in the May 1974, 1976 and 1978 issues of the Review (nos. 68, 76 and 84).

Note (3) page 32 The February Reviews contain explicit forecasts,only in the last two years; in 1981 a 5 per cent lira devaluation against the dollar was predicted, and was followed by a 6 per cent devaluation in the EMS, although the depreciation against the dollar eventually went much further. In 1982 a further 5 per cent lira devaluation was forecast and also a short-term yen appreciation of 7 per cent, with a further 10 per cent at the start of 1983. In fact, by January 1983 the lira and the yen were respectively about 13 per cent and 25 per cent below their dollar levels of January 1982. The large and extremely important appreciations of the dollar in both years against other currencies were not anticipated.

Note (1) page 33 The Financial Statement's use of weighting based on UK markets makes comparisons with National Institute forecasts unreliable, however.

Note (1) page 35 It helped also to explain why consumer prices rose a little less than expected in the US but rather more in Western Europe.