Passage 2
For World Economy, the Worst of Recession Has Passed
For many nations, the worst of economic slump is over.
After a slow first half, the United States recovery has accelerate
D. Some economists are talking of a real 4 per cent or better growth rate this quarter. The monthly survey of members of the National Association of Purchasing Management found a “ healthy increase” in both manufacturing and the overall economy in November.
Business is picking up in Canada and Britain also. Canada should have around 2.7 per cent real growth this year. The new British budget, announced this week, assumes a real growth rate next year of 2.5 per cent.
But on the European continent, the situation is less happy. "The economic climate has deterio­rated further, albeit at a declining rate," a European Community report commented recently. "There are still few signs of a cyclical turning point being reached."
The MIT economist criticizes the French government for strangling the economy with high inter­est rates in order to keep the franc strong against the German deutsche mark. As a result, Dornbusch predicts, France will experience rising unemployment in 1993,1994 and 1995. And mass un­employment will worsen France's budget deficit and the prospect for tax cuts or more government spending to boost the economy.
The Japanese economy remains in trouble, with output falling two quarters in a row for the first time in decades. An appreciation of more than 15 per cent in real terms in the Yen over the past two years has hurt Japanese competitiveness, Dornbusch notes. The fiscal package to stimulate the econ­omy, to be implemented next April, "will help some but not much".
The high value of the Yen has contributed to the competitiveness of Japanese manufacturers.