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Published online by Cambridge University Press: 26 March 2020
Fuller data confirm the impression which we formed in May that OECD countries' total output did not change much in the first quarter. It probably increased by about ¼ per cent, with even this small rise attributable wholly to stock movements in the US. Final demand in the US fell and there were declines in total output in a number of countries, including Japan, Germany, Australia, the Netherlands, Switzerland and possibly Italy (for which there are conflicting estimates), white France achieved only marginal growth. The fall was notably severe in Germany, where construction suffered badly in the cold winter. This probably had a wider impact also, and, in North America at least, the initial effect of the slump in oil prices seems to have been depressive, with drilling activity sharply reduced, especially in the US. There may also have been a tendency for expenditure, perhaps on investment in particular, to be deferred in the expectation of falling prices and interest rates.
(1) OECD Economic Outlook 39, May 1986, p. 40.
(1) Unless otherwise indicated, prices in this section are quoted in US dollars.
(2) OECD estimates that the real cost of carrying stocks has exceeded 10 per cent a year over the past 4-5 years (OECD Economic Outlook 39, May 1986, p.7).
(1) We have long distrusted the seasonal adjustments used by ISCO, believing that they tend both for industrial production and for GDP to yield results which are too high for the first quarter and too low for the third. The ISTAT series for GDP has been introduced only recently and there has been little opportunity to assess its reliability. It is, however, hard to reconcile a fall in output with the recent mood of optimism in the country. Confidence was notably high in the spring, particularly among consumers.
For the purposes of tables 18 and 19 of the Statistical Appendix we are, as usual, using the figures published by OECD, who, with questionable consistency, follow ISTAT for GDP but ISCO for industrial production. On the latter there is a smaller discrepancy than for GDP, with a rise which ISCO puts at about 3 per cent and ISTAT at about 1½ per cent.