OECD Economic Outlook, Volume 2005 Issue 2
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OECD Economic Outlook, Volume 2005 Issue 2

Twice a year, the OECD Economic Outlook analyses the major trends and examines the economic policies required to foster high and sustainable growth in member countries. Developments in major non-OECD economies are also evaluated. The present issue covers the outlook to end-2007. Together with a wide range of cross-country statistics, the Outlook provides a unique tool to keep abreast of world economic developments.  In addition to the themes featured regularly, this issue contains an analytical chapter addressing the recent run-up in house prices.
Publication Date :
19 Jan 2006
DOI :
10.1787/eco_outlook-v2005-2-en
 
Chapter
 

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Authors:
OECD
Pages :
121–122
DOI :
10.1787/eco_outlook-v2005-2-37-en

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Despite extremely favourable shifts in the terms of trade, real GDP growth has slowed in 2005 and is set to decelerate gradually over the projection period. This is largely the result of a policy-induced deterioration in the investment climate at a time when capacity constraints were already starting to affect performance.

In these circumstances, mounting pressure for further fiscal easing should be resisted. The cut in the value-added-tax now being considered by the authorities would be particularly ill advised, as it would needlessly stimulate already booming consumption, fuelling inflation and undermining competitiveness. A renewed structural reform effort, underpinned by fiscal discipline, could boost investor confidence and contribute to increasing potential output.

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