Twice a year, the OECD Economic Outlook analyses the major trends that will mark the next two years. The present issue covers the outlook to the end of 2004 and examines the economic policies required to foster high and sustainable growth in member countries. Developments in selected major non-OECD economies are also evaluated in detail.
In addition to the themes featured regularly, this issue contains four analytical chapters addressing the following important questions: the deterioration in budgetary positions in most OECD countries, raising the labour force participation of older workers, the benefits that OECD countries could achieve from undertaking reforms to promote product market competition, and inflation rates in some of the larger, slow-growing economies have not declined sufficiently to offset higher rates elsewhere in the euro area.
- 24 Dec 2002
With robust export growth largely offsetting the contraction in domestic demand, the economic downturn has been milder and shorter than expected. It has, nevertheless sufficed to correct the sizeable external deficit and high inflation that had emerged in recent years. Improved fundamentals have allowed some monetary easing and set the stage for a gradual recovery.
As inflation has moved well within the target band, further interest cuts might be warranted. However, steady monetary tightening will probably be required later in the projection period when the output gap is expected to close and major investment projects are likely to get underway. Public spending discipline will be crucial to offset the fiscal effect of both tax cuts and infrastructure expenditure related to those projects.