The leading non-Communist industrial nations are going to slide almost all together into a world recession this year as a result of the latest round of oil price increases, according to initial estimates by a western-based international organization.
Sources with access to the preliminary calculations of the Paris-based Organization for Economic Cooperation and Development said that they show an across-the-board drop of about one-sixth in the estimated economic growth of major industrial countries.
In other recessions since World War II, the two key economic regions have not usually gone into a downturn in lockstep. This made it possible for the U.S. and the West European economies to help each other out or at least to exert enough pull to prevent further downturns.
The great exception was the recession that followed the first great round of oil price rises during the Arab oil embargo of 1973-74.
The OECD forecast is in line with U.S. assessments of the impact of the price increases announced last week by the Organization of Petroleum Exporting Countries.President Carter said Sunday that a recession was likely in the United States with the gross national product possibly declining by 2.5 percent by the end of 1980, while inflation may rise 2.5 percentage points more than what it otherwise would have been.
All the effects of higher oil prices will be magnified on the weak economies of the poor developing countries, according to James Reddington, a U.S. analyst of the International Energy Agency, a sister organization of the OECD.
In Western Europe and the United States, it undoubtedly means more unemployment. The nine-nation European Economic Community already has a politically explozive number of unemployed - 6 million in a region used to full employment. Carter said the price hikes would cost Americans 800,000 jobs by next year.
Reddington said that the weighted average of last week's confusing and divergent price increases is about 16.5 percent, making a total of more than 45 percent so far this year.
The OECD had originally estimated that the industrialized West would have a barely comfortable growth of 3.5 percent this year. After the first round of oil price rises in April that was revised downward to 3 percent. The latest round of price rises has prompted the highly respected economic forecasters of the OECD to make another downward revision to 2.5 percent - a level generally considered to be receessionary.
An economic downturn to 2.5 percent growth could put a major crimp in any meaningful programs to cut down on the industrial use of oil. A panel of experts at a conference here today of the Atlantic Institute agreed that a 4 percent growth rate is needed to make the kinds of major investments to replace industrial plants that consume unnecessarily large amounts of oil.
The conference moderator, former U.S. ambassador Martin Hillen-brand, director of the institute, spoke of the "paradox" that, contrary to conventional wisdom, high economic growth is needed to create major savings in energy consumption by industry.
A study submitted to the European community Wednesday came to the surprising conclusion that economic growth is needed to achieve energy conservation.
The usual view has been that more growth simply meant more energy consumption. The panel of a dozen experts that made the study was headed by Frenchman, Jean Saint Geour, a member of the club of Rome, a group that authored a trail-blazing study rejecting the assumption that economic growth is necessarily needed or desirable.
But Saint Geour's group concluded that Western Europe must grow by 4 percent a year through 1990 to cut energy consumption.
Saint Geour referred today at the Atlantic Institute to an earlier study adopted by the British government showing that industrial energy consumption savings ranging from 15 to 50 percent depending on the industry, are possible with current technology. The rub is that this requires major investment in new factories or major modications to existing ones.
This raises the prospect of a vicious circle in which the West might not be able to generate the growth it needs to save much more energy.
The European community is taking a pessimistic view that the OPEC governments mean to keep the industralized world on a short energy leash, always providing slightly less than the West's demand for oil regardless of how much it manages to cut back energy consumption.
This view was expressed by European Common Market energy commissioner Guido Brunner in an interview published yesterday by the International Herald Tribune after a meeting he had in London with OPEC leaders last weekend.
The Common Market is planning soon to compare notes here with the International Energy Agency on the likelihood of what Brunner called "economic brinksmanship" of that sort.
The IEA's Reddington expressed skepticism that OPEC would really be irrational enough to take the risk of creating an even worse economic tailspin. He said that OPEC does not have the economic forecasting machinery it would need to finetune projections of Western oil demand within 1 million barrels a day up or down.