OECD SEES GERMAN GROWTH HIT BY LOW DOMESTIC DEMAND West German economic growth will slow to 1.5 pct this year from 2.4 pct in 1986 due to weak domestic demand and tougher competition from abroad, the Organisation for Economic Cooperation and Development (OECD) said in its semi-annual review of the world economy. This view is less favourable than the West German government's forecast of a growth rate of under two pct this year, but is in line with forecasts by independent economic institutes of growth ranging from 1.5 to two pct. The OECD said that the economy should pick up next year, with the gross national product rising by two pct in real terms. The OECD said it assumed the German economy was passing through a period of temporary weakness and there would be some recovery in business confidence in the near future. But it warned that the key to an improvement in the economy was higher domestic demand, which is only forecast to rise by 2.5 pct this year and 2.75 pct in 1988, below 1986's 3.7 pct. While noting that the government is bringing forward a five billion mark tax reform to January 1988, the OECD said that "the medium to longer-term performance of the West German economy could be improved by reduction of subsidies - which would allow relatively lower tax rates." Since the OECD report was compiled, the West German Federal Statistics Office has released figures showing that the GNP actually fell 0.5 pct in real terms in the first quarter of this year compared with the final three months of 1986. Diplomatic sources here said that West Germany appeared likely to finish the year with the lowest growth rate of any of the Group of Seven leading industrial nations. West Germany's current account surplus, the target of considerable criticism by the Reagan administration, is expected to rise slightly to 37 billion dlrs this year from 35.8 billion in 1986, before declining to 29 billion dlrs in 1988.