Global Economy Faces Slack Period Ahead Indicators Show US, Canada on Upswing, Japan and Germany Moving Down, Other Industrial Nations Registering Little Change

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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 predict.

A thumbnail sketch of the economic scene in several countries follows:

* 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 blues behind.

"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. …


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