OECD URGES ACTION TO CUT U.S. BUDGET DEFICIT The United States should take urgent action to cut its crippling budget deficit, including possible reductions in non-defense spending, higher taxes and curbs on growth of the defense budget, the Organization for Economic Cooperation and Development said. The OECD, in its semi-annual review of the world economy, said a failure of the Reagan Administration and Congress quickly to agree on measures to cut the deficit "could seriously affect confidence, both in the United States and elsewhere." It predicted that the federal deficit in fiscal 1987, running until September 30 this year, would substantially overshoot both the Balanced Budget Act's target of 144 billion dlrs and official U.S. Estimates in February of 175 billion. "The OECD projection, which is based on assumptions of slower growth, higher interest rates and actual data for the first half of the financial year, is for a deficit of about 190 billion dollars," it said. While this would be 30 billion lower than last year's deficit, much of the improvement would be due to corporate tax increases being introduced before income tax cuts take effect. The U.S. Economic growth rate is expected to edge up to 2.75 pct next year from 2.5 pct this year and last. In contrast to the last two years, more competitive exports boosted by the fall in the dollar should help GNP growth. Unemployment should continue to fall slowly as the service sector continues to create jobs. But inflation appears to be heading higher, partly due to the lower dollar, with consumer prices forecast to rise four pct this year and 4.5 pct next year after just 2.1 pct in 1986. "Monetary and fiscal policy appear to be the key factors behind the avoidance of recession," the report said. The current account balance of payments deficit is expected to be still around a high 125 billion dlrs next year, after hitting a projected record 147.25 billion this year, it said. In Canada economic growth is expected to pick up slightly to around 2.75 pct in 1988 from 2.5 pct this year, but will still be below levels seen in recent years. Inflation is expected to slow to 3.5 pct next year from 3.75 pct this year, unemployment should edge down to nine pct in 1988 from 9.25 pct this year. Canada's current account deficit is projected to shrink to around four billion U.S. Dlrs this year and to remain at about that level in 1988.