IMF SEES INDUSTRIAL NATIONS GROWING ONLY 2.5 PCT
The International Monetary Fund
predicts that the industrial world will grow a sluggish 2.5 pct
in 1987, a sharp drop from the more than three pct forecast six
months ago, monetary sources said.
    The forecasts, prepared by the IMF staff, will form the
basis of a debate on economic policy coordination by officials
of top industrial nations at high-level meetings next week.
    The sources said the IMF predicts an expansion of just 2.5
pct in the U.S., shaving a full one point off its original 1987
forecast, released last fall.
    The figures will be discussed by the IMF's executive board
before going to the IMF's policy-making Interim Committee here
next week and may be subject to slight revision, they said.
    The Reagan administration has forecast 3.2 pct U.S.
economic growth this year while more pessimistic Fed officials
are predicting 2.5 to three pct.
    The sources said the IMF also predicts growth of around 
2.5 pct in West Germany, and 2.8 pct in Japan.
    Washington has extracted promises from both West Germany
and Japan that they will take measures to bolster their
domestic economic growth, to help reduce the massive gap
between their huge trade surpluses and the record American
trade deficit.
    Poor economic growth figures in these two nations and the
U.S. are likely to do little to reassure currency markets.
    In recent days, the dollar has come under heavy selling
pressure as markets have grown cynical that Bonn and Tokyo will
take early action.
    With no economic stimulus in sight, financial markets have
reduced the dollar's value to levels that are more likely to
balance U.S. trade, monetary analysts say.
    Monetary sources also said the IMF forecasts overall growth
in developing nations of around three pct this year, with
developing countries in the western hemisphere -- the
Caribbean, Central and South America -- expanding 3.3 pct.
    In its recent annual report, the Inter-American Development
Bank said Latin American nations need to expand between four
and five pct this year to service their 382 billion dlrs of
foreign debt.
    Non-oil exporting Third World nations should achieve an
expansion of around four per cent while oil exporting nations
will average almost no growth at all, the sources said.
    Also short of the mark is the level of industrial country
growth. Western officials maintain the industrial world needs
to expand at least three per cent annually -- against this
year's initial IMF prediction of 2.5 pct -- in order to support
the export drive of debtor nations.
    Exports provide the indebted world, which owes western
creditors some 900 billion dlrs, with its principal source of
foreign exchange for debt repayments.
    In other forecasts, the IMF put overall global growth at
about 2.8 pct and output in the seven leading industrial
nations at around 2.5 pct.
    The seven -- the United States, Japan, West Germany,
Britain, France, Italy and Canada -- have become the main forum
for coordination of medium-term economic policies in the
industrial world. The prediction for the seven is also around
2.5 pct growth in 1987.
    The Fund put Canadian growth at about 2.7 pct, the French
expansion at 2.9 pct and Britain at 2.8 pct.
    The figures will be discussed as part of an overall debate
on the World Economic Outlook and the U.S. debt strategy by the
Interim Committee.
    Those talks are one of several meetings between top
economic officials of industrial and developing nations during
the semi-annual meetings of the IMF and the World Bank.
 Reuter
