. BECAUSE OF HER COMPETITIVENESS AND DYNAMIC APPROACH TO EXPORTING , JAPAN'S ECONOMY HAS SINCE 1976 GROWN BY 5.3 % A YEAR . BOTH THE USA AND JAPAN HAVE RECENTLY BEEN BACK IN SURPLUS ON THEIR CURRENT ACCOUNTS ( SEE TABLE 13 ) .
ON TOP OF THIS ADJUSTMENT CRISIS HAS COME THE RECESSION CAUSED BY THE SECOND OIL PRICE RISE AND THE DOLLAR'S INSTABILITY . IT HAS BEEN MORE INTRACTABLE FOR EUROPE AND HAS INFLICTED MORE DAMAGE ON THE EUROPEAN ECONOMIES THAN ON JAPAN AND THE USA . IN 1981 , REAL GROSS DOMESTIC PRODUCT FOR THE COMMUNITY AS A WHOLE WILL CONTRACT SLIGHTLY . FROM EARLY 1980 UNTIL TODAY , THE NUMBER OF REGISTERED UNEMPLOYED IN THE COMMUNITY HAS CLIMBED BY SOME THREE MILLION TO OVER NINE MILLION , OVER 8 % OF THE LABOUR FORCE . SUCCESSES IN HOLDING DOWN INFLATION HAVE REMAINED MODEST , WITH COST AND PRICE TREND DIVERGENCES WIDENING BETWEEN THE MEMBER COUNTRIES . BALANCE OF PAYMENTS DEFICITS AND INTEREST RATES ARE AT RECORD LEVELS .
THE BUSINESS CYCLE IS NOW TURNING FOR THE BETTER IN EUROPE . THE CHALLENGE TO THE COMMUNITY IS TO ENSURE THAT THE MODERATE RECOVERY NOW IN PROSPECT FOR 1982 IS DEVELOPED INTO A PERIOD OF SUSTAINED GROWTH AND STABILITY WHICH CREATES NEW JOBS AND REDUCES UNEMPLOYMENT IN A CLIMATE OF LOW INFLATION . BUT THIS EXPORT-LED RECOVERY REMAINS FRAGILE AND DEPENDS ON THE OPTIMAL INTERACTION OF A FAVOURABLE EXPANSION OF WORLD TRADE , IMPROVED AND SUSTAINED COMPETITIVENESS IN THE MEMBER STATES AND DECLINING INTEREST RATES . IT SHOULD BE REINFORCED DOMESTICALLY BY IMPROVED CORPORATE PROFITABILITY , MORE EFFECTIVE INCENTIVE SCHEMES AND THE EASIER AVAILABILITY OF CAPITAL TO ENCOURAGE INVESTMENT AND FACILITATE THE RENEWAL AND RESTRUCTURING OF PRODUCTIVE CAPACITY IN EUROPE .
A BETTER BALANCE OF PAYMENTS PERFORMANCE WOULD INCREASE THE SCOPE FOR BRINGING DOWN INTEREST RATES AND EASING MONETARY RESTRAINT . IF THE COMMUNITY WISHES TO TAKE ADVANTAGE OF EXPANDING EXTERNAL DEMAND , ALL TENDENCIES TOWARD GREATER PROTECTIONISM SHOULD BE FIRMLY CHECKED . TO THE EXTENT THAT SOME POSSIBILITIES EXIST FOR A SELECTIVE SUPPORT OF DEMAND , THIS MUST BE USED IN AREAS WHERE MANPOWER AND PRODUCTION FACILITIES ARE AVAILABLE AND WHERE THE DIRECT IMPACT ON THE BALANCE OF PAYMENTS IS SLIGHT .
THE REALIGNMENT OF CENTRAL RATES IN THE EMS ON 4 OCTOBER 1981 IS A NEW POINT OF REFERENCE FOR THE MANAGEMENT OF ECONOMIC POLICY IN THE PERIOD AHEAD . IN ITSELF THE REALIGNMENT WAS AN ACT OF SOUND MANAGEMENT , CONFIRMING THAT THE SYSTEM CAN ADJUST WITHOUT LETTING LOOSE ERRATIC OR OVERSHOOTING EXCHANGE RATE MOVEMENTS AMONG PARTICIPANTS . HOWEVER , IT ALSO UNDERLINES THE NEED FOR RENEWED AND STRONGER EFFORTS TO ACHIEVE CONVERGENCE IN COST DEVELOPMENTS AND IN BUDGETARY AND DOMESTIC MONETARY POLICIES . IN ADDITION , THE REALIGNMENT ITSELF WARRANTS INTERNAL POLICY ADJUSTMENTS , ON THE ONE HAND FOR STRICTER POLICIES FOR CONTROL OF PUBLIC DEFICITS AND COSTS IN DEVALUING COUNTRIES , AND ON THE OTHER HAND FOR MEASURES TO SUPPORT ACTIVITY IN REVALUING