2005 OECD Economic Outlook, Volume 2005 Issue 1

image of OECD Economic Outlook, Volume 2005 Issue 1

Presents OECD's assessment of the economic outlook to the end of 2006 for the OECD area and China, Brazil, and the Russian Federation.  It finds that Japan and the US have rebounded but that Europe is lacking in sustained momentum, and it carefully examines why. This issue of the OECD Economic Outlook also includes several medium-term scenarios projecting to 2010. The special chapter covers measuring and assessing underlying inflation.

English Also available in: German, French


Economic growth is likely to be uneven during the first half of 2005. A recovery is set to establish itself later in the year with growth averaging 2-2½ per cent through to the end of 2006. Domestic demand will be less strong in 2005 than in 2004 but export growth should respond to increasing foreign demand, picking up quite strongly later this year. Employment growth will be modest, permitting only a small fall in unemployment. Underlying inflation may increase slightly, though headline inflation is set to decline. While the budget deficit may ease, it is likely to stay stuck at 3% of GDP.

Quarterly data for GDP growth has been particularly volatile since mid-2004; the slowdown in the first quarter of 2005 was partly due to lower public spending. On the other hand, the recent announcement of a supplementary increase in public sector wages, relatively small in itself, is symptomatic of a need for continuing efforts to control public spending if the deficit is to be reduced by more than foreseen in these projections.

English Also available in: French

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