OECD Nations Grow but Jobs a Concern

The U.S. economy is growing robustly, Japan seems well on the road to economic recovery and Europe could join them with an upturn later this year, but unemployment remains a worry, the Organization for Economic Cooperation and Development said Thursday.

The OECD said in its semiannual Economic Outlook that it expected growth in its 27-member countries to average 2.1% this year, marginally more than last year. Growth is seen rising to 2.5% in 1997.

The OECD was slightly gloomier about this year and next than in its last report in December, the group’s chief economist, Kumiharu Shigehara, told a news conference at its Paris headquarters.

Shigehara said Japan’s recovery appeared to be broadening, with imports rising, even if the economic surge reported this week for the first quarter may have been inflated by one-time factors.

In the United States, the economy was seen growing robustly, but Shigehara said that raised some questions.

“Employment growth has been strong in recent months, raising the question of whether the economy may not be expanding faster than its potential rate,” he said.

He said he expected the Federal Reserve Board to nudge short-term interest rates upward, even if there were few signs of inflation.

The OECD was assuming monetary policy would be tightened in the second half of 1997. It forecast 2.3% growth in gross domestic product for the United States this year and growth of 2.0% in 1997. For Japan, it predicted 2.2% and 2.4% GDP growth, respectively, in those years.

After a slowdown in the latter half of 1995, the OECD said, Europe should start to follow the growth path embarked on by Japan and the U.S.--as long as there is a recovery in confidence.

“The short-term outlook is for greater convergence across the main OECD regions, with continued, sustainable growth in the United States, a more sustained recovery in Japan and a pickup in Europe,” the report said.

Although most OECD countries had come close to the objective of price stability--with inflation expected to be less than 3% in 19 OECD countries this year--it was important for monetary policy to be used to protect these gains.

However, the report warned that modest growth rates throughout the OECD’s three main regions would not be accompanied by any significant upturn on the jobs front.

Unemployment is likely to remain at about 7.75% this year and next overall.