Slow recovery forecast
Despite a rash of relatively optimistic forecasts, the United States, Canada, and Western Europe are likely to experience little or no economic growth this year and only a slow recovery in 1983, according to a midyear economic report released Sept. 7 by the Conference Board.
Leading world economies will be stymied by continuing high, though declining, interest rates; weakened corporate profits; stagnating real incomes; and relatively restrictive policies.
''Given these circumstances, there are few reasons to anticipate any recovery in 1982 or even 1983,'' concludes Dr. Frank Wittendal, who is director of economic research at the Conference Board's European office.
The economic outlook now hinges more on politics than economics, the report says. While restrictive government policies may reduce inflation rates by 2 or 3 percentage points, the cost will be high unemployment, reduced business investment, a proliferation of bankruptcies, and another inflationary upsurge once monetary policies are relaxed. Renewed inflationary pressures, already evident in the US and Europe, are a highly likely prospect in 1983 for major world economies. The report views inflation as the effect, not the cause, of volatility in interest and exchange rates, which have disrupted Western trade and reduced Western economic performance. The reduced US share of overall trade, coupled with shifts in international trading patterns, triggered changes in the international monetary system, bringing the dollar under increased competition from other leading countries, especially the deutsche mark and Japanese yen, the report says.