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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.

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Spain

Sustained by the persistent dynamism of domestic demand, activity should accelerate to over 3% by 2006. Net exports, however, are likely to remain a drag on activity. Inflation may moderate slightly after the pass-through of the oil price hike but should remain about one percentage point above the euro area average.

Although the neutral fiscal stance is currently appropriate, a tighter fiscal policy would be desirable in the medium run to reduce domestic demand pressures and prepare for the fiscal consequences of population ageing. Further pension reforms also need to be considered. Continued efforts to improve productivity growth and a reform of the wage bargaining system would help to halt the deterioration in competitiveness.

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