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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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Ireland

Growth in the first half of this year was underpinned by an unanticipated surge in public consumption and strong exports, both of which should fade. Nonetheless, output growth is projected to pick up gradually from 3½ per cent this year to 4½ per cent in 2004, supported by private consumption and a recovery of investment. Inflation is projected to edge down, but if wage growth fails to decelerate there would be a further loss of competitiveness and slower growth.

The government needs to move quickly to bring the rapid growth of public employment and consumption under control so as to maintain needed improvements to infrastructure without increasing the budget deficit. The recommended rise in public sector wages should only be granted against commitments to improve work practices. There is no room for another national wage agreement based on tax cuts.

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