Economic Survey 1987

In real terms, the OEC D countries achieved an overall G.N.P. growth rate of 2.5 per cent in 1986. As a whole, they are expected to grow by 2.8 per cent in 1987. Mainly due to recent oil price increases, inflation rate is expected to rise in the O.E.C.D. areas. In the U.S.A. especially, import prices will rise because of the depreciation of the U.S. dollar. Protectionist tendencies still continue, especially in the U.S.A. and Japan, and this could dampen world trade in 1987. On the domestic scene, inflation is likely to rise in 1987 due to the general increases in oil and some domestic food prices announced during the first four months of 1987; the excess liquidity which prevailed in the economy in 1986 may also exert pressure on prices. The final implementation of the Ramtu Salary Commission, coupled with the general rise in minimum wages gazetted recently, are expected to stimulate aggregate domestic demand in 1987. The resultant higher aggregate demand will have favourable effects in most sectors of the economy.