World Bank President Barber Conable yesterday warned that the world stands on "the brink of a deep recession" as economic growth falters in both industrial and developing nations.

In a speech in Paris to the United Nations Conference on Trade and Development, Conable said the world economy has reached a "crucial juncture, ... a period when, by decision or by default, the nations represented here will set a course either toward renewed global growth or toward stagnation and eventual recession. Those are the choices," he declared. A copy of his text was made available here.

A combination of forces has brought the world economy to its precarious state, with particularly devastating results for developing countries, Conable said. "Stuttering growth, volatile currencies, high real interest rates, heavy debt loads, depressed commodity prices, rising trade barriers and outsize {international} payments imbalances have acted in destructive combination not just to slow earlier rates of advance, but actually to erode many previous gains by developing societies," he said.

A return to faster growth will take a number of difficult actions, Conable continued. "Such growth requires further adjustment by developing nations," including making their economies more efficient by opening them to competition from abroad, he said.

"But above all, it requires action by industrialized country governments," the World Bank president argued. "Actions on {economic} adjustment, trade and resource flows {to developing nations} are vital steps which are needed to strengthen their own economies and those of the rest of the world.

"Such actions are complementary," he said. "Adjustment reforms and improved trading prospects will not contribute fully to the resumption of growth in the developing world without concomitant increases in the net external resources available to developing countries, particularly the most heavily indebted and poorest among them."

The "net external resources" to which he referred would be what a developing country had left after adding up its earnings from trade and foreign investments, new private investment by foreigners and loans and grants from foreign private or governmental sources, and then subtracting its imports and repayments on old loans. Debt repayment burdens have been so large recently for some developing countries that they have been sending more money out than has been coming in, leaving them short of funds for investment and to pay for critically needed imports.

Conable, a former Republican congressman who has headed the World Bank for a year, said that the countries that most need to stimulate their economies are those in Europe and Asia with large international surpluses. Conable mentioned no names, but such a description would fit Japan and West Germany, among others.

He also urged that the United States pursue "progressive budget-deficit reductions." And he also said "powerful" countries should stabilize the foreign exchange values of their currencies.