Modest recovery for industrial nations should stretch through 1986

THE world economic recovery has at least another year to go. That's the view of the economists at the Paris-based Organization for Economic Cooperation and Development -- and they have lots of company.

A survey of more than 40 forecasting groups by Blue Chip Economic Worldscan -- including groups in the United Kingdom, West Germany, Switzerland, Canada, and Japan as well as the United States -- finds general agreement that the output of goods and services in the industrial nations will continue to grow during the rest of this year and in 1986. But the pace of growth will be modest.

``Inflation fires will not pose any new problems for the major industrialized nations,'' says Worldscan (Capital Publications Inc.).

Unfortunately, not all is hunky-dory. The OECD, in its semiannual Economic Outlook, called for the United States to take ``significant action'' to reduce its budget deficit. Otherwise, the report says, current imbalances in the global economy may attain ``unmanageable proportions'' and threaten the world recovery.

The OECD economists added: ``. . . other countries too should consider what role their own policies might play in contributing to an international configuration of policy-settings conducive to a performance that is both sustainable and adequate.''

That last sentence, written in international ``diplomatese,'' is telling other industrial nations to keep their economies growing at reasonable rates to help keep the world recovery going.

Since the release of the OECD report in late May, the Reagan administration and the Congress have moved somewhat closer to approving a deficit-reduction package, although it may be smaller than planned earlier.

Further, the US dollar has weakened on world exchanges. This trend is welcome, because it will make American goods more competitive on world markets and at home. Eventually, a lower-priced dollar should reduce the enormous international payments deficit of the US (perhaps $150 billion this year), help maintain domestic growth, and reduce the pounding protectionist pressures on Washington.

World recovery is important to the industrial nations. Continued expansion in the US boosts government tax revenues and thereby reduces the deficit. In Western Europe, more-rapid recovery would trim high unemployment rates.

To the less developed countries, an extension of the recovery will help boost their exports to the industrial nations, enabling them to earn money to service their massive debts. Developing-country exports last year rose 4.5 percent to $521.2 bilion, the first increase in three years.

Some of these debtor nations now have economies large enough to have a visible impact on the world's economic system. Blue Chip Economic Worldscan, recognizing this, asked the forecasters it surveys about their predictions for Mexico and Brazil.

Here's Blue Chip's consensus forecast, released this week, for economic growth this year: West Germany, 2.6 percent; France, 1.6 percent; United Kingdom, 2.9 percent; Italy, 2.4 percent; Brazil, 3.4 percent; Mexico, 3.3 percent; Japan, 4.6 percent; Australia, 3.4 percent; Canada, 3.2 percent; and the US, 2.8 percent.

Forecasts for next year show a range between 2 percent for France and the U.K. to 3.9 percent for Japan. The consensus prediction for the US is 2.4 percent.

The forecasters also expect interest rates to decline by the first quarter of 1986 in all the industrial countries except the US.

Key to the world's economic health is a robust American economy. Weak retail sales in June made some economists anxious about continuation of the recovery. But most, looking at the rapid growth of money and declining interest rates, figure the tempo of activity should pick up soon.

The world will sigh with relief when it does. 30{et