The United States, West Germany and Japan will fall far short of meeting their own economic growth targets this year, an international group of influential economists said yesterday.
And unless they move promptly in the direction of expansion, the 1977 targets won't even be met in 1978, they predicted. As a result, unemployment will remain high or even worsen in the industrial world.
To cope with the grim outlook, the economists called for other major countries, including Canada and several in western Europe, to join in a movement for economic stimulation.
Year-over-year growth targets for 1977, as set last May at the London Economic Summit, were 4.5 to 5 per cent for Germany, 5.5 and 5.7 per cent for the United States and 6.7 per cent for Japan. The economists yesterday estimated that the actual scorecard would instead read 3 per cent for Germany; 4.75 for the United States and 5.75 per cent for Japan.
"It is important," a statement released yesterday said, "to ensure that the growth of output for some time ahead should exceed the growth of productive potential and not fall short of it."
At a news conference, the economists estimated that economic performance in the United States and West Germany is running at least 7 per cent below its potential, and that the gap in Japan is about 10 per cent.
The economists met there in the ninth of a series of Tripartite Conferences sponsored by the Brookings Institution, the Japan Economic Research Center and the Kiel Institute for World Economics of West Germany.
The German Marshall Fund of the United States contributes to the financing of the sessions. In addition to the "big three" countries, Italy, France and Britain were also represented.
The call for all major nations to step up the pace of economic activity echoed a theme initiated at the International Monetary Fund annual meeting in Washington at the end of September. In a reversal of policy, the IMF urged a focus on recovery instead of inflation control.
For 1978, the economic outlook foreseen by the Tripartite group was somewhat more grim that predicted during the IMP meeting. For example, against a private IMF staff estimate that real economic growth in Germany would recover to a rate of 4.8 per cent in the first half of 1978, the group yesterday predicted a German gain of only 3.5 per cent for the full year 1978.
For the United States, the IMF had predicted a 5.1 per cent fist half GNP growth. But the more sluggish pattern noted here recently was reflected in a forecast by the Tripartite group for an American Gross National Product growth slipping to 4.25 per cent next year.
The U.S. unemployment rate, which the economists said would be 7 per cent this year, well over President Carter's target, would improve only fractionally to 6.75 per cent in 1978. Brookings' director of research, Joseph A. Pechman, told a reporter that, because of time lags, "whatever fiscal measure are taken next year, the 1973 figures won't budge much."
As for Japan, the economists forecast that the 5.75 per cent gain in 1977 would drop off to 5.5 per cent in 1978 without some significant changes in Japanese government programs to stimulate the economy.
Brookings President Bruce K. MacLaury, speaking for the group, stressed that "no single policy, but a set of measures" will be required to close the gap between potential and actual output in the industrial countries.
He and others in the group conceded that there are still serious, if diminishing, rates of inflation in several of the major countries. But the group's statement says that "nowhere . . . can inflation be attributed to excess demands at the present time."
Present inflation, instead, was attributed to cost-push pressures, which could be alteviated by some form of voluntary wage and price restraints.
In that connection, Herbert Giersch of the Kiel Institute suggested that "a slowdown in wage increases in the next few years will add to employment [now], and a high payoff in terms of higher wages [later on]."
Like the IMP, the economists who participated in the Tripartite Conference shifted their emphasis since they met here a year ago. Then, they put the burden of pulling the world out of recession on the United States, West Germany and Japan, assuming them to be "engines of world recovery."
But none of the leaders performed as well as Predicted, and a general stagnation occurred. At the same time both England (helped by North Sea oil and Italy (helped by an austerity program) improved their balances of payments and inflation results.
The Tripartite Conference thus called on them along with Switzerland and the Netherlands, who now enjoy balance-of-payments surpluses, to join in the expansionary move. As to the big three, the message was "try even harder."
In addition to MacLaury, Pechman and Giersch, other participants were Hisao Kanamori and Seuo Schiguchi of the japan Economic Center. Tadeo Uchida of the University of japan, Pascal Salin of the University of Paris. Angelo Tantazzi of the University of Bologna; Norbert Walter of Kiel, G.D.N . Worswick of the London National Institute of Economic and Social Research, Gardner Ackley of the University of Michigan, J.R. de Cotret of the Conference Board of Canada and Robert Solomon of Brookings.