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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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Switzerland

The slowdown in activity continued in conjunction with the slackening of the external environment and the appreciation of the franc. GDP growth, which was close to zero in 2002, should however pick up and reach around 1½ per cent in 2003, thanks to the international recovery and to an expansionary monetary policy. The improvement in the economic situation is unlikely to result in a fall in unemployment before mid-2003, while inflation could ease to less than ½ per cent.

The very accommodating stance of monetary policy is appropriate and should be maintained until the recovery is firmly established. But a more expansionary fiscal policy is hardly advisable, and would not be consistent with the new debt containment rule, which implies a stable cyclically-adjusted balance. There is a need to boost potential growth and this requires a more efficient factor utilisation, which should be stimulated by enhanced competition.

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