Worst over in world economy?

Press, 24 September 1983, Page 22

Worst over in world economy?

NZPA-Reuter Washington

Despite two years of economic crisis, the delicately woven global monetary system has managed to hold together and many experts feel the worst may be over.

. There is a growing feeling among central bankers, Finance Ministers, and other specialists who will gather in Washington this month for the annual meeting of the International Monetary Fund and World Bank that conditions may be on the mend, despite the huge debt problems in many countries and deep recession in others.

Many specialists remain cautious about the outlook, but there is a view that if the battered monetary system could weather the last 18 months, it can handle almost anything. The largest economy, the United States, is emerging from the worst recession since the 19305, and is expected to provide the catalyst that will stimulate some recovery in the developing world and elsewhere. American Government figure show that in the first six months of this year, imports from non-oil producing Third World coun-

tries rose 9.8 per cent after a 0.2 per cent decline in the same 1982 period. This is cited by Reagan Administration officials in support of the United States position that the process of recovery is already beginning to spread, an action the IMF recently suggested in its annual report was the most pressing need for the world economy. The World Bank, in its annual report, was less optimistic, taking the position that the outlook for developing countries remained grim despite evidence of recovery in industrial nations. While agreeing that there were many problems to be faced, United States officials are concerned that the annual IMF/World Bank meeting will see its trading partners pressing for dramatic changes that reflect the impact of the recent recession rather than the recovery that appears to be taking hold.

“We have been through a very bad time, but things are improving and any moves we make must take that into account,” said an American official who asked not to be identified.

“It is still very frightening, but it does seem man-

ageable,” said one senior American official.

The experts say that high on the list of priorities is the complex, politically loaded issue of getting the United States Congress to approve a $12.9 billion infusion of funds for the IMF. The Reagan Administration has approved it but has run into problems persuading Congress to provide the money at a time when budget deficits are running at record levels. The problem has been compounded by the anti-IMF view of some key legislators who dislike funding an agency that assists countries opposed to foreign-policy goals.