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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Spain
Economic growth slowed considerably in the first half of 2002, reflecting weaker household spending and sluggish foreign demand. Despite subdued activity, inflation has accelerated and the differential with the euro area remains high. Stronger exports should revive domestic demand, lifting GDP growth to 2½ per cent in 2003 and above potential in 2004.
From 2003 onwards, all levels of administration have to aim at a budget in balance or surplus. Given the uncertainty about the final budgetary impact of the personal income tax cut planned for 2003, the government will have to control expenditure tightly to avoid a deterioration in the cyclically-adjusted balance. Reforms of the wage bargaining system should aim at establishing a closer link between wage and productivity growth, which should help in reducing the inflation differential with the euro area.
Also available in: French
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