A Glowing Look At World's Economy
ALLEN SINAI radiates economic optimism. The top economist for Lehman Brothers Global Economics in New York speaks of an ''emerging global prosperity.''
''The synchronous expansion of so many countries in so many areas of the world has no precedent in modern economic history,'' he says.
Mr. Sinai welcomes the slowdown in the United States economy -- the world's mightiest -- as ''a real pause that refreshes.'' Recession, he adds, is unlikely, mainly because ''the economic fundamentals are still so good.'' There are no excesses of consequence in either the financial, industrial, or service side of the economy. Inflation is ''subdued.'' Thus the Federal Reserve can act freely as a ''fail-safe mechanism,'' lowering interest rates quickly should the inflation-adjusted real growth in output of goods and services drop below 1 percent, he adds. Sinai predicts a pickup in the pace of the US economy from a modest 1.5 percent to 2 percent real annual growth rate this spring to a 3-plus percent rate by fall.
The recovery in Germany, Europe's powerhouse economy, is ''soft,'' says Sinai. ''Tax increases early this year and budget restraint are restraining consumption.''
But Martin Kohlhaussen, chairman of Commerzbank, Germany's third largest commercial bank, is more cheery. He anticipates a solid real growth rate of 3 percent both this year and next, despite the strength of the German mark on foreign exchange markets. ''Recovery is clearly under way,'' he said in Boston.
Sinai sees several factors behind his expectation of a ''long global upturn:''
r* World peace, at least among the big powers.
* The entrance of numerous countries into the global economy. He sees a kind of ''perpetual prosperity'' in the Asia-Pacific region, with real growth rates ranging from 5 to 9 percent a year this year and next for Korea, Taiwan, Hong Kong, Singapore, India, Indonesia, the Philippines, and Malaysia. China is ''both a help and a risk'' with double-digit growth and 20-plus percent inflation.
* Widespread diffusion of business activity around the world. Sinai's analysis stretches to Australia and New Zealand, growing 3 to 5 percent a year; Scandinavia showing ''goods gains'' between 2.5 and 4 percent; South Africa in sustained expansion after years of stagnation; and Israel growing nearly 6 percent.
* Immense needs for infrastructure everywhere.
* Heavy consumer demands for all kinds of items.
* Increased worldwide productive capacity, greater supplies, and relatively easy financing.
* Lower trade barriers stimulating world trade.
Of the 49 countries Sinai's group of economists surveyed, 46 have expanding economies -- ''more or less.'' In most countries, inflation is ''reasonably well-behaved.''
According to Sinai, the British economy should slow down to 3 to 3.5 percent real growth this year and next as the government restrains ''a fledgling acceleration of inflation.'' Mexico's economy will dip 2 to 3 percent and Argentina's economy is slowing. But most other Latin American countries are in solid expansion.
Japan, struggling with the shock of earthquakes, other tragedies, and past excesses in real estate and the stock market, will grow 1.5 to 2 percent in 1995, 3 percent in 1996. Canada is running a tight monetary policy to protect its dollar, but still should grow slightly faster than the US.
In Eastern Europe, Poland, Czechoslovakia, and Hungary are growing between 3 and 4 percent.
Commerzbank's Mr. Kohlhausen agrees on the positive picture for those three nations, but says ''skepticism prevails'' for other East European countries and nations of the former Soviet Union. Both he and Sinai expect East Germany, now part of Germany, to grow 8 to 9 percent this year. Moreover, says Kohlhausen, the infusion of capital from West Germany into East Germany ''will gradually decrease.''
Sinai forecasts the world economy growing 2.6 percent after inflation this year, down from 2.9 percent last year. But next year it will grow 3 percent, he says. If it happens, the world will have enjoyed its three best years economically in many years.