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
 
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Authors:
OECD
Pages :
109–110
DOI :
10.1787/eco_outlook-v2005-2-31-en

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Growth should remain strong in 2006 and 2007, close to potential rates (slightly above 3%), driven by buoyant domestic demand and some pick-up in exports following recovery in Europe. Headline inflation is expected to abate somewhat after its recent hike, and core inflation should remain broadly stable, but the differential with the euro area average is likely to persist, further eroding competitiveness.

Moving to a tighter fiscal stance would be desirable to reduce domestic demand pressures and to prepare for the fiscal consequences of ageing. Halting the deterioration in competitiveness will also require making the automatic wage indexation system more flexible. The priority given by the authorities to redirecting government spending to enhance productivity growth is welcome.

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