Newspaper article THE JOURNAL RECORD

Industrial Nations Get Rare Opportunity to Reverse Economic Slowdownn in '88

Newspaper article THE JOURNAL RECORD

Industrial Nations Get Rare Opportunity to Reverse Economic Slowdownn in '88

Article excerpt

PARIS - World economic growth has been shrinking and shrinking, but so gradually - and so inexorably - that economists have grown accustomed to the numbers. Yet a stark tale emerges when those numbers are added togethr year after year and their impact is examined.

There is an academic ring to the words ``slower international economic growth.'' But translated into human terms, hese words lose their textbook abstraction.

- They mean longer unemployment lines from the north of England to northern Ohio and fewer opportunities for 16-year-olds from Pasadena to Paris.

- In the developing world, they mean something even more painful: malnourished children, ramshackle housing, high rates of infant mortality.

Together, they weave a quilt of many interconnecting colors, and that is the only way they can be looked at: Economists have long recognized that slower world growth hurts everyone, from the richest nations to the poorest and that all are bound together.

The numbers are telling: In the 1950s and 1960s, the global economy grew by about 5 percent a year, sending living standards galloping forward in much of the world. In the 1970s, growth fell to slightly above 3 percent, and in the '80s it has slipped to about 2.3 percent. The outlook for the next few years is for a continued slide.

The slowdown is having serious effects on expectations and living standards in much of the world.

- For the average American worker, the slowdown in growth has meant that real income has not risen since 1973.

- In Europe, growth has been so slow that the jobless rate has soared to over 11 percent.

- For the debt-plagued nations of Africa and South America, this slowing trend has pushed per capita income 15 percent below the levels of 1980.

Yet, as 1988 dawns, many economists believe the world faces a rare opportunity in economic history.

For the first time, they say, the leading industrial nations might have the power to reverse the slowdown, mainly because of an unusual confluence of circumstances.

- Inflation and budget deficits have been tamed in many nations.

- Corporate profits are healthy and interest rates are lower than they were a few months ago.

- Several important technological breakthroughs, such as fiber optics and superconductors, are waiting to be spread through the world; big technological advances often push growth by creating new opportunities and jobs.

``The conditions for going back to 3 to 4 percent growth in the world economy are actually better now than they have been at any time since the 1960s,'' said Stephen Marris, senior economist with the Institute for International Economics in Washington.

Yet if the leading industrial nations fail to work together to help reduce trade imbalances and push growth upward, some economists warn of serious trouble ahead. …

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