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14. One should not have illusions about this years economic up-swing, which the Institute precisely forecast. After the cyclical up-swing follows the cyclical fali. A crude overiew - for a morę serious analysis there was no interest or funds - indicates that next year (1970) we will have a recession with halving of the industrial ratę of growth, increase of retail prices over 10% and increased unemploy-ment of 80,000 or morę. The unavoidable conseąuences of economic disturbances are also political conflicts.

The described phenomena show unambiguously that economic po-licy up to now has been very mistaken in something and that it cannot be essentially corrected by partial measures. It is obvious that we are moving further and further away from the goals of the reform. How-ever, neither the State apparatus nor anyone else prepares some morę effective alternative. Accordingly it can be expected that there will be essentially corrected bv partial measures. It is obvious that we are while possible. That will inevitably lead to ever stronger administrat-ive interventions.¹⁷ Administrative interventions cali into question both the economic and political stability of the country. It is difficult to imagine that the failure of the reform could remain without morę serious political consequences and that after two unsuccessful reforms of 1961 and 1965 it would be possible to enter in a similar way into a third. It is also difficult to imagine 400-500 thousand unemployed in the country and half a million at work abroad.

4. COMPARISON OF FORF.CASTS OF ECONOMIC MOVEMENTS IN

RESOLUTIONS OF THE FEDERAL PARLIAMENT AND MEMORANDA

OF THE INSTITUTE OF ECONOMIC STUDIES

The first precondition of an effective economic policy is sufficiently accurate forecasting of economic movements. Table 2 and the graphs show how we stand in that respect.

We shall consider separatelly movements in each of the cited years.

In the Resolution of the Federal Parliament for 1969 equilibrium of the current balance of payments with the convertible area was established as a goal. Morę rapid development of the insufficiently developed regions (2 index points above the Yugoslav average), stable prices and removal of the source of illiquidity of the economy were expected. At the request of the Central Committee of the Yugoslav League of Communists the Institute of Economic Studies in December 1968 prepared an estimate of the economic situation with a forecast of further development. In that study¹⁸ it is stated (p. 26): »At the beginning of 1969 further acceleration of production, reduction of indebtedness and an increase of liquidity, reduction of the pressure of costs and relatively stable prices, and perhaps also a reduction of

¹⁷ In October 1970, that is a year after the above text was written, prices were

frozen.

¹⁰ IEN, Ocjena ekonomske situacije i predvidanja dalnjeg razvoja, Rad br. 12.

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