Trade Agreements Brightening the Gloomy World Economies : Finance: GATT, in particular, is expected to provide a strong boost at a time when key countries are dealing with recession, unemployment, inflation and other ills.

The world’s economies staggered through 1993 with a wide range of maladies, from recession in Japan to high unemployment in Western Europe and inflation in Russia. But economists see a healthier future as they pin their hopes on expanding world trade.

The 117-nation General Agreement on Tariffs and Trade, in particular, is expected to provide a strong boost by eliminating many tariffs that impede the flow of goods and services. The pact, 400 pages long, was seven years in the making and finalized in mid-December.

GATT is scheduled to take effect in 1995, after it has been ratified by the participating nations. The formal signing will be in Morocco in April.

Economists say it couldn’t come at a more welcome time.

As 1994 opens, unemployment is ravaging Western Europe, weak oil prices are hurting Organization of Petroleum Exporting Countries and inflation is gripping the former Soviet republics and Eastern Europe.

The United States is moving farther out of recession, but higher interest rates could derail its fragile recovery. Latin America and Africa also are looking toward renewed growth after emerging from years of debt crises and droughts.

In Asia, the so-called “Small Tigers” of Singapore, Taiwan, South Korea, Hong Kong, Malaysia and Thailand, growth champions for years, are finding themselves overshadowed by the “Big Tiger” of China, which expanded at a double-digit pace.

Western Europe had pinned its economic recovery on the creation of a separate 17-nation free trade zone embracing 380 million people from the Arctic to the Mediterranean. The pact, made in January, was not ratified until December.

About 18 million people remain jobless in the 12-nation European Community, an unemployment rate of 10.6%. Economists predict it could reach 11.3% by 1995.

Jacques Delors, president of the EC executive commission, said the EC would have to bring more people into the job market or face the end of the European way of life, with 30 million unemployed by the end of the century.

EC Economics Commissioner Henning Christophersen predicted the EC economy would grow 1.3% in 1994, following a 0.4% contraction in 1993.

“The recovery must mainly come from trade with third countries,” he said.

But which countries?

Japan, whose unemployment is rising as corporate profits, auto exports and the stock market are all plunging, faces bleak prospects this year.

Despite a tradition of lifetime employment, more Japanese companies have resorted to dismissing workers. Bank of Japan Gov. Yasushi Mieno said in December that there were still no signs of a recovery.

The United States, experiencing a stop-and-go recovery since the most recent recession ended in March, 1991, faces modestly favorable prospects for this year. Its economy will grow about 2.8% this year, the same as last year, the National Assn. of Business Economists forecast.

The United States, Canada and Mexico agreed to the North American Free Trade Agreement in December, 1993. NAFTA takes in 360 million consumers and about $7 trillion a year in production.

In South America, the Third World’s biggest debtor, Brazil reached a deal with creditor banks on a major part of its $120 billion in foreign debt. It was the last major Latin American country to do so under a U.S.-sponsored plan.

“When completed, (the agreement) will mark the end of the Latin American debt crisis,” which had stuck the region in economic stagnation in the 1980s, said bank negotiator William Rhodes.

The OPEC nations seem to be entering an economic crisis of their own. Unable to agree on a production cut to raise prices, the 12-member cartel decided in November to leave its crude output unchanged at 24.52 million barrels a day.

With the oil market glutted, said Ian Seymour, editor of the Middle East Economic Survey, OPEC faces the possibility of prices moving even lower. That would help restrain inflation in the developed world, but Seymour said it “would obviously be catastrophic on the finances of OPEC.”

Meanwhile, parts of Asia anticipated more growth in 1994. Deutsche Bank of Germany predicted a gross domestic product growth rate of 6.2% in Taiwan, 5.8% in South Korea, 7.2% in Singapore and 4.5% in Hong Kong.

Hong Kong, a British colony to become part of China in 1997, saw its economy grow 5.5% in 1993, and its per capita output surpassed Britain’s.

Thailand is estimated to grow 8.5% this year on top of 7.5% last year.

Merrill Lynch & Co. forecasts 7.8% growth for Indonesia and 8.3% for Malaysia. Only the Philippines lags in the area with 3.8% growth foreseen byMerrill Lynch prediction.

But China--which grew at 13% in 1992 and was expected to surpass that rate in 1993--was the standout. Success came as the Communist Party announced that 100 state-owned enterprises would be turned into independently run Western-style businesses over the next seven years.

China’s record growth “over the past 15 years has already brought it roughly the same per capita income levels as the economies in Eastern Europe,” said Union Bank of Switzerland.

But Nobel Economics Prize winner Douglass C. North said the former Soviet republics will take about 50 years to reach Western economic levels “if they are lucky.”

In the republics and the ex-communist countries of eastern Europe, chaos and confusion reigned in 1993 as democracy struggled to take hold.

Hyperinflation, unemployment and declining industrial production were the main economic ailments.