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2002 OECD Economic Outlook, Volume 2002 Issue 2

image of OECD Economic Outlook, Volume 2002 Issue 2

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.

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Finland

Output growth continues to be volatile, with a surge in the second quarter mainly due to exports. As international demand picks up, GDP growth should reach 3 per cent next year, in line with potential, and may exceed it in 2004. If the export recovery is delayed there is a risk of labour shedding and weakening domestic demand, which until now has held up reasonably well.

The general government account has remained in surplus. However, slippage against fiscal targets needs to be addressed, especially given a rapidly ageing population. In this context, the recent agreement on pension reform, which increases incentives to work longer and provides adjustments to reflect increasing life expectancy, is welcome. Further improvements in the labour market will require additional reform of the tax and benefit systems to raise work incentives and increase demand for low-skilled workers.

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