OECD Economic Outlook, Interim Report March 2009
This interim OECD Economic Outlook analyses the current crisis and examines the economic policies required to foster a sustained recovery in member countries. This issue covers the outlook to end-2010 for both OECD and major non‑OECD economies. A particular spotlight is put on fiscal policy in a special chapter entitled The Effectiveness and Scope of Fiscal Stimulus. It addresses the following issues: How governments in OECD countries changed the stance of fiscal policy in response to the crisis and What is the scope for additional fiscal stimulus in OECD countries to cushion the recession and help the recovery.
General Assessment of the Macroeconomic Situation
The OECD economy is in the midst of its deepest and most widespread recession for more than 50 years (Table 1.1). Output has declined in almost all OECD countries in the past six months and with non-OECD countries slowing sharply, world growth has turned negative. Tight financial conditions and a generalised loss of confidence will continue to weigh on activity in the current year before a projected policy-induced recovery brings growth close to potential by end-2010. By that time, an exceptional degree of slack will have emerged in the OECD economy, with unemployment rates of above 10% in the United States and the euro area. This will push down inflation rates to close to zero in several countries, and some will experience falling price levels.
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