The UK Economy

The Australian Economic Review, 1992

This two-year quarterly forecast ,fi-om the Access Economics Murphy (AEM) model updates that presented in the 2nd quarter 1992 issue of the Australian Economic Review. The economic, recovery is patchy, with only public, final demand and housing investment moving ,forward decisively, but could broaden in 1993, ifprivate business ji.red investment begins inc,reasing. It has ,fallen by a recession-inducing one-third since the middle of 1989. GDP growth could rise from a mediocre 2.4 per cent in 1992-93 to a strong 4.3 per cent in 1993-94. Unemployment may remain around I 1 per cent f h r-the remainder of 1992-93, before falling to a year-average level of about 10 per cent in 1993-94. CPI inflation under 2 per cent per annum on a year-on-year basis is likely in 1992-93 hut, with economic recovery and the flow-through effects of the depreciation, it is forecast to rise to 4 per cent per annum in 1993-94. The current account deficit is rising with economic recovery, and by 1993-94 could he 5 per cent of GDP, compared with a sustainable level of 3 to 3.5 per cent. An assessment of the accuracy rfthe AEM model and government official economic growth forecasts in the recession years of 1990-91 to 1992-93 was conducted, using the forecasts from the Business Review Weekly's panel as a reference point. The high uccurc~cy ranking of the AEM forecasts is consistent with international evidence that the most accurate forecasts are model-based with judgmental adjustments. The official forecasts met international standards of accuracy from 1978-79 to 1989-90, and the recent fall in their performance is puzzling. The Australian Economic Review 4th Quarter 1992 international environment, fiscal policy, monetary policy, and trends in productivity and demography. The forecast is set out in Section 3, supported by detailed tables. It covers the national accounts, wages and prices, employment and unemployment, financial markets, the public sector, and the balance of payments. The assessment of the accuracy of different sources of economic growth forecasts in the recession is contained in Section 4.

1990

Deregulation and liberalization of product, labor, and financial marketstogether with higher levels of investment and rapid technological advances in industrial and services sectorsshould make the 1990s a period of rapid growth in the highincome OECD countries and a number of leading developing countries. But the pattern of international financial flows is likely to perpetuate two tracks of high and low growth in the developing world. The Policy, Research, and Extenal Affairs Comnplex distributes PRE Working Papers to dissaninate the findings of work in progress and to encourage the exchange of ideas among Bank staff and all others interested in development issues. These papers carry the names of the authors, reflect only their views, and should be used and cited accordingly. The findings, interpreutions, and conclusions are the authors' own. They should not be auributed to the World Bank, its Board of Directors, its managanent, or any of its member countries.

2000

Estimate Forecast €bn % €bn €bn Value Volume Value Price Volume Source: Eurostat

2000

1990