cent compared with 6.6 per cent in 1984 and an average of 6 per cent during the preceding decade. At the same time, terms of trade deteriorated, trade deficits remained large and the debt-service burden increased during 1985.
The deteriorating international environment was the major single factor con- tributing to various setbacks. For the first time in several years, exports of the Bank's developing member countries declined, main- ly due to lower imports by industrial countries. Both economic slowdown in the industrial countries and protectionist measures ac- counted for the lower imports.
The reduced external demand for manufactured goods, together with falling commodity prices and heavy debt-service burdens, have taken their toll on the economic performance of developing countries. The newly industrializing countries have been par- ticularly affected by a drop in exports to tradi- tional markets. The GDP growth rates of Hong Kong and Taiwan were sharply reduced and Singapore recorded a decline in GDP. Primary producers in Southeast Asia suffered an un- precedented decline in several key commodi- ty prices: rubber, tin, copper, palm oil, timber, sugar and rice. GDP growth rates of Indonesia, Malaysia and Thailand were reduced by nearly half, and the Philippines recorded a decline in GDP for the second suc- cessive year. In Indonesia and Malaysia, the situation was aggravated by the sharp and continuing fall in the price of crude oil.
Adverse external factors had limited impact on the countries of South Asia, many
of which are less dependent on international trade and where agricultural production plays an important part in overall economic perfor- mance. In fact, overall growth rates in several countries in South Asia were satisfactory aş a result of strong growth in agriculture and the adoption of macroeconomic policies appro- priate to external and domestic economic conditions.
On the positive side, the sharp fall in the US dollar exchange rate since September 1985 against major currencies, in particular the Yen, is having a favorable impact on several of our developing members. Also, the large decline in oil prices to their lowest level in the last seven years has helped improve price stability in many of the developing countries and has had a positive effect on the balance of payments of oil-Importing countries. The full impact of these developments will be felt this year.
Factors which contributed to lower economic growth in developing countries are, by and large, beyond their control. The decline In exports of manufactured goods and the fall in prices of primary commodities have not only adversely affected the profitability of enterprises and the Income of the region's vast rural population, but also have had a negative impact on revenues of the govern- ments of developing countries which were compelled to drastically reduce their develop- ment expenditures.
Many developing countries took measures to increase resources for financing development. These included increases in tax- ation; reductions in food subsidies, subsidies
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