Back Toward Normal

From Paris last week came an economic prognosis likely to cheer business men on both sides of the Atlantic. It was a 90-page report from the experts of the Organization for Economic Cooperation and Development. Its gist: the down days for Western economies are about over.

There had been fears that last year's tough but necessary measures taken to deflate the economies of the major industrial nations--including the U.S., Britain and Germany--might go too far, turning a mild downturn throughout much of the West into a crippling recession. Not so, says OECD. The average growth rate of production in the OECD's 21 free-world member nations, which hummed along at a healthy 6% in the latter half of 1965, slowed to about 3% by the end of 1966, may come out to a barely perceptible 2% in the first half of 1967. But, predicts OECD, things will start looking better in the second half.

Consumer demand in Britain will rise "fairly strongly," in part because of the end of the statutory wage "freeze" this month. And even though Germany's downturn has been steeper than anyone expected, the OECD sees a "moderate recovery" in the second half. In turn, the recoveries will tone up the flagging economies of small countries such as Sweden, Denmark and The Netherlands, which depend heavily on exports to Britain and Germany.

The big tonic is expected to come from the U.S. Blaming the sluggish U.S. economy on a delayed reaction to last year's tight money policy, the OECD sees "a quite sharp pickup, particularly in the later months" of 1967. There are, of course, uncertainties: should lagging production severely crimp corporate profits and personal paychecks, a revival will be long in coming. If all goes well, the OECD countries can expect that "at least by the end of this year, a more normal rate of growth will have been resumed, which should then continue into 1968."

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