Review of the quarter's economic trends [July 1977]

For most of the industrialised world the first half of 1977 has been a period of relatively slow growth, and relatively little progress towards the twin policy goals of price stability and full employment. In many ways the situation is radically different from that of similar periods of slow growth in earlier decades, when the constraints on the expansionary leanings of finance ministers stemmed mainly from the balance of payments. As this quarterly analysis shows, while many countries now shoulder deficits which would have been thought unbearable in the sixties, the primacy of the trade balance as a policy constraint has been usurped by inflation. Governments now refrain from expanding demand because of the supposedly adverse effects on inflation, rather than the former fear of a balance of payments deficit