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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.

English French, German

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General Assessment of the Macroeconomic Situation

The global recovery is slow and irregular, not unlike some earlier upturns. The seemingly encouraging start early in 2002 was partly of a technical nature, reflecting slower destocking, and momentum weakened in the second quarter. Nonetheless, considerable monetary and fiscal stimulus has been rapidly put in place. It clearly boosted public spending, consumption and housing investment in North America and some European economies through to mid-2002. Reinforced by monetary loosening later in the year, the effects of the stimulus will continue to feed through for some time. The apparent bottoming out of the information-technology downturn is also helping, as is the resilience of growth in most of Asia excluding Japan and in Russia. A fallback into recession is therefore improbable, even though greater geopolitical uncertainty and a further slide in world equity markets have been weighing on confidence in the second half of this year. Overall, OECD GDP growth will not exceed 1½ per cent in 2002 and a broad-based recovery is unlikely to emerge until current uncertainties dissipate, possibly well into 2003. Only in 2004 would the output gap start narrowing.

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