THE world economy is behaving like a seesaw. Two countries on
one end, the United States and Canada, are headed up; two
heavyweights on the other end, Japan and Germany, are going down.
On balance, the world economy has slowed from last year and no
rapid pickup is anticipated.
"There is enough growth abroad to give a little support to the
US recovery," says Geoffrey Moore, director of the Center for
International Business Cycle Research at Columbia University.
His center's analysis shows that statistical leading indicators
for five nations - the US, Canada, Australia, Taiwan, and New
Zealand - are positive, indicating more rapid growth in the months
ahead. The leading indicators for Japan and Germany are negative.
And the indicators for France, Britain, Italy, and South Korea
signal not much change in economic activity.
This mixed picture, notes Dr. Moore, is better than a "unified
recession." Far more countries experienced hard times together in
the slumps of 1973-74 and 1981-82.
Rudi Dornbusch, an economist at the Massachusetts Institute of
Technology, sees "a real chance" that 1992, rather than bringing
recovery, will bring a slide toward world recession. "The
ingredients are quite clear: a loss in confidence, financial
fragility, and too little monetary easing, or too late," he told a
seminar organized by the Massachusetts Institute of Technology's
new World Economy Laboratory on March 13.
But most economists are more cheerful. A survey earlier this
month, by the newsletter Globescope, of forecasts by 44 financial
or business institutions in several countries showed, on average,
real growth in output this year in all the nations examined. The
numbers: US, 1.7 percent; Canada, 2.4; Japan, 2.7; Germany, 1.8;
France, 2.0; Italy, 1.9; Britain, 1.5; Spain, 2.8; Australia, 2.3;
Mexico, 4.3, and Brazil, 1.5.
With such a modest growth pattern, inflation is declining in
most industrial countries, except perhaps Germany. "Core inflation
is down," says Professor Dornbusch. Inflation in these rich
nations, on average, will run 3.4 percent this year, economists
A thumbnail sketch of the economic scene in several countries
* United States: Recent statistics have been encouraging. Sales
of North-American-made vehicles rose 14 percent in early March.
Retail sales increased 1.3 percent in February and a revised 2.1
percent in January, possibly indicating consumers are leaving their
"The economy is on the threshold of its best gains since 1988,"
say economists at the Prudential Insurance Company of America. They
have just raised their forecast for US output to a 4.5 percent
annual rate in the second half, a prediction well above the average. …