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2005 OECD Economic Outlook, Volume 2005 Issue 2

image of OECD Economic Outlook, Volume 2005 Issue 2
Twice a year, the OECD Economic Outlook analyses the major trends and examines the economic policies required to foster high and sustainable growth in member countries. Developments in major non-OECD economies are also evaluated. The present issue covers the outlook to end-2007. Together with a wide range of cross-country statistics, the Outlook provides a unique tool to keep abreast of world economic developments.  In addition to the themes featured regularly, this issue contains an analytical chapter addressing the recent run-up in house prices.

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Australia

Economic activity strengthened in the first half of 2005, primarily driven by business investment. With non-residential investment expected to remain buoyant, the ending of the housing boom to be orderly and gradual, and the drag from net exports diminishing, output is likely to accelerate in 2006 and 2007. This should help to sustain the good labour market performance. Inflation may edge up somewhat in response to surging energy prices.

To preserve price stability, monetary policy needs to remain on guard to prevent higher energy prices from feeding into core inflation. The stabilisation task should be facilitated by the projected steady fiscal surpluses over coming years. Rapid implementation of the planned industrial relations reform would also help as it would promote productivity gains and restrain unit labour cost growth.

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