Although the world economy still faces severe problems, "there are early signs that inflationary pressures are abating, albeit slowly," Jacques de Larosiere, managing director of the International Monetary Fund said yesterday in Geneva.
In an cautiously upbeat assessment, which mentioned other encouraging signs that rich and poor countries alike could meet their major internal and external economic goals, de Larosiere abandoned the characterization of "grim" that he had applied to the world economy as recently as May 26, in a speech in Paris, following the IMF Interim Committee meeting in Gabon.
IMF sources did not want to put a label on the de Larosiere speech. "I don't know whether it is more optimistic or less pessimistic," said one official.
Just prior to the Gabon meeting, U.S. Treasury officials said that they were taking a more optimistic view than outlined by de Larosiere, who had used the word "grim" in an assessment the previous week, which predicted a long stretch of high inflation and slow growth.
In his Geneva speech yesterday, to the United Nations Economic and Social Council, de Larosiere still warned that there is "no room for complacency," adding that the process of adjustment to recent pressures caused by inflation, recession and high oil prices "will be slow and entail sacrifices." He stressed, as well, the need for the IMF to expand its financial resources to meet a loan demand that is running two to three times that of previous years. And he warned that protectionist sentiment and pressures remain in the industrial world.
Nonetheless, the over-all thrust of de Larosiere's remarks was that most of these pressures -- notably in the energy sector -- are easing. He noted that despite an "unfavorable global environment, the growth of gross domestic products and total exports in real terms in the nonoil developing countries as a group has been surprisingly resilient."
He even offered the hope that economic growth in the industrial world, estimated at a paltry one percent for 1981, would resume "in due course," providing the impetus for expansion in the less developed countries that even now are "maintaining reasonably satisfactory growth rates."
De Larosiere reported that inflation, as measured by consumer prices in industrial countries, had dropped from 13 1/2 percent in the first half of 1980 to 10 percent in the following year, with further moderation expected through 1982.He attributed the decline to completion of the adjustment to oil price increases and to the effect of restrictive financial policies, including a slowdown in money-growth rates. Still, he said, inflation is likely to remain "unacceptably high."
Other encouraging signs he cited:
Efforts aimed at energy conservation and efficient use of energy resources "are beginning to bear fruit," a reference to the current oil glut that is depressing prices.
"Sound demand management and supply-oriented policies" adopted by the major nations, which should result in better economic growth. De Larosiere took the occasion, however, to issue a thinly veiled warning that the U.S. may be pursuing too strict a monetary policy that "runs the risk of pushing up interest rates."
International capital markets have shown they can effectively channel funds from the surplus countries to those needing to borrow. The recycling process, de Larosiere added, has been further facilitated by the substantial increase in funds loaned by the IMF and other international agencies. So far this year (though June 30), the IMF has made loan commitments of about $12 billion, exceeding the $11.5 billion for all of 1980.