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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Output growth slowed sharply during the first half of the year, as high energy prices weighed on
private consumption and weaker foreign markets on exports. The economy nonetheless retains
considerable momentum, notably in the services sector, and should soon return to a faster pace. The
increase in headline inflation has triggered an indexation of salaries, which could lead to
second-round effects.
Fiscal automatic stabilisers have been allowed to operate freely during the slowdown and the public deficit has therefore exceeded 2% of GDP. The government should do more to rein in public spending, which has been growing at nearly two-digit rates.
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