GERMAN ECONOMIC OUTLOOK SEEN FAIRLY BRIGHT The outlook for the West German economy is relatively bright, with gross national product expected to expand by three pct this year, Kiel University's Institute for World Economy said. The GNP forecast by the institute, one of five leading economic research bodies in West Germany, is more optimistic than that of the other institutes, some of which have recently reduced their GNP forecasts to between two and 2.5 pct. In a report the Kiel institute said West Germany's export outlook has not deteriorated fundamentally despite the mark's strength against the dollar and other major currencies. "The danger that exports will slump in 1987 appears, all in all, limited," the report said. "On the contrary, a slight rise in exports can be expected." The institute said past experience has shown West German exporters will move to counterbalance currency factors by cutting costs, trying to penetrate new markets and adjusting their product ranges. They will be aided in 1987 by an expected slight rise in economic growth in industrial countries. At the same time, the decline in exports to oil producing countries looks set to slow this year. West German GNP growth in 1987 will be led by renewed advances in domestic consumption and investment spending, both of which will in turn be buoyed by an expansionary monetary policy, the institute said. However, it said the labour market would see only a slight improvement because companies will be reluctant to hire additional workers due to higher labour costs caused partly by agreed reductions in working hours. The institute cautioned that the expansionary stance of monetary policy in West Germany was likely to bring a marked acceleration of inflation. It also warned that what it called the worldwide synchronization of monetary policy heightened the risk of a new global recession. It said central banks in industrialized countries, including the Bundesbank, had followed the Federal Reserve Board's expansionary course. The institute said this in turn was bound to lead eventually to a rise in worldwide inflation and a shift in U.S. Policy towards a more restrictive policy. Other central banks were likely to follow suit, causing a recession that could aggravate the debt crisis of developing countries as well as increase protectionism around the world. Although Germany cannot entirely shield itself from the negative effects of the global synchronization of monetary policy, it should do all it can to strengthen the forces of growth at home. The institute said this could be done by ensuring that fiscal policy fosters a willingness to work and invest. Taxes should be cut by a greater amount than currently planned, and wage increases in 1987 and 1988 should be markedly lower than in 1986. It also said the Bundesbank should reduce inflationary pressures by cutting the current rate of growth in money supply to about four pct.