The World Economic Outlook (WEO) presents the IMF’s leading economists’ analyses of global economic developments during the near and medium terms. It is a respected, one-stop, trusted resource offering remarkable insight, balance, and perspective to decision makers and policymakers worldwide. Published twice yearly, the World Economic Outlook presents the outlook for growth, inflation, trade, employment, and other economic developments in a clear, practical format. Each WEO considers the issues affecting advanced, emerging market, and developing economies. Central bankers, economists, Financial institutions, business leaders, governments, think tanks, and researchers eagerly await this unique investigation of what’s happening and what’s ahead.

This paper highlights that the performance of the world economy in 1984 turned out to be considerably better than had been expected at the beginning of the year. Output grew robustly in the industrial countries, especially in the United States and Japan; inflation continued to decline; and developing countries saw a noteworthy improvement both in their balance-of-payments position and in their domestic growth performance. Fears that the debt situation might deteriorate did not materialize.

This report presents revised projections resulting from a country-by-country updating of the estimates published in the April 1985 World Economic Outlook. The projections are based on the usual technical assumptions of (1) unchanged nominal exchange rates among industrial countries; (2) unchanged oil prices in nominal U.S. dollar terms; and (3) “constant policies.” The report also stresses the interactions of policies and developments among IMF members. These interactions are particularly evident from the way in which differences in economic policy mix have affected domestic savings and investment positions and hence interest rate differentials and trade flows.

This paper highlights that there have been increasing signs of hesitancy in the pace of world economic expansion in the first half of 1985. In the United States, output growth declined to an average of 1 percent (at an annual rate) in the first two quarters of the year from 5.7 percent during 1984, and in other industrial countries, the pace of recovery was also generally subdued. Commodity prices fell significantly, thus weakening growth prospects in many developing countries.