Experts differ sharply on whether world's economy is darkening
TWO highly influential international economic organizations have just issued gloomy forecasts for the world in the months ahead. ``The economic situation has deteriorated in recent months and OECD projections to the end of 1988 point to little improvement,'' says the Paris-based Organization for Economic Cooperation and Development.
``There is danger ahead and it must be averted by flexible policy adjustment,'' warns the Bank for International Settlements, the central bank of central banks in Basel, Switzerland.
But Dr. Geoffrey H. Moore, perhaps the world's leading expert on the business cycle, comments: ``The leading indicators don't support them.'' Rather, they point to a pickup in world growth.
Dr. Moore is director of Columbia University's Center for International Business Cycle Research. He keeps track of nine key economies in the world, and collects or compiles leading indexes - statistical series that indicate the future of the economy - for each of them.
The latest numbers show ``a generally good picture for these economies,'' says Moore.
In fact, the leading indexes for Japan, Australia, and Taiwan are advancing at double-digit rates, promising considerably faster growth.
The index for the United States is rising at an 8 percent annual rate, up from 5 percent three months ago and 3 percent six months ago. That, Dr. Moore says, suggests growth in national output at a healthy 3-4 percent annual rate in the months ahead.
Dr. Moore reviews a number of indexes for the US besides the ``leading indicators'' published by the Department of Commerce. These include one that looks at employment, another that reports on the views of purchasing agents, and a third put together by Business Week magazine.
``They are all fairly optimistic in their performance,'' he says. ``I certainly don't see any sign of recession peeking around the corner.''
Dr. Moore's numbers also indicate good growth ahead in the United Kingdom and France. The picture for West Germany looked quite weak until recently and is still ``hard to judge.'' On balance, Moore sees some improvement there also.
The growth rate of the leading indexes for Canada and Italy is only 3-4 percent, but still signaling expansion.
If measures of stock prices - one statistical series that usually makes up a leading index - are removed from the calculations, the numbers are not quite so strong, says Moore. Nonetheless, they still present ``a pretty optimistic picture.''
Another bit of good news: the US trade deficit should decline further. Moore has put together a simple forecasting method for exports and imports, using the leading index and the exchange rate for the dollar.
According to Moore's index, the real volume of exports should expand handsomely and the real volume of imports grow only a little.
Dr. Moore prides himself on being ``scientific'' in his work. He doesn't make exaggerated claims for his indexes, saying only that he has ``confidence in their ability to tell us something of the future.''
If that confidence proves well-founded, the world economy should look much better in the months to come, whether or not Germany stimulates its expansion and the US cuts its budget deficit.