OECD Optimistic On Global Economy: Protectionism, Interest Rates Held Threat to World Recovery
PARIS, Dec. 21ÛÓEconomists for the leading industrialized nations today issued their most optimistic report in several years on prospects for the world economy, hut warned that the present recovery could he endangered by protectionism and high interest rates.</br></br>A biannual report released by the Organization for Economic Cooperation and Development showed that economic growth rates in the United States, Japan and West Germany are significantly higher than previously expected. But it also showed that the performance of the other industrialized countries in Western Europe continues to lag because of high budget, deficits and institutional rigidities such as trade union opposition to economic modernization.</br></br>The report said that inflation has fallen significantly and is running at an annual rate of just over 5 percent for the 24 OECD countries, compared with a peak of 1J.(åÈ percent in early 1980. Unemployment, which had been rising, has leveled off, thanks largely to a big increase in the number of jobs in the United States.</br></br>Aside from these optimistic predictions, the report's main message was its description of the differences between the economic recovery in the United States and Europe. The OECD economists expressed some doubt about the sustainability of the See OECD, D2, Col. ;i</br></br>recovery in Europe, which they attributed more to an increase in consumer spending than to any significant upturn in investment. At a press conference, the acting head of the OECD Economics and Statistics Department, Kjell Andersen, acknowledged that high interest rates in the United States are having a negative impact on Western Europe. But he argued that this was offset by the locomotive effect of U.S. economic growth and the competitive advantage enjoyed by European companies because of a high U.S. dollar.