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2006 OECD Economic Outlook, Volume 2006 Issue 1

image of OECD Economic Outlook, Volume 2006 Issue 1
OECD's twice-yearly assessment of the major economic trends and policies in member countries and selected non-members. This issue covers the outlook to the end of 2007.  Together with a wide range of cross-country statistics, the Outlook provides a unique tool to keep abreast of world economic developments. This issue also contains a special chapter on Future Budget Pressures Arising from Spending on Health and Long-Term Care.

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Canada

The Canadian economy slowed at the end of last year but has since rebounded and is still operating close to full capacity. It is expected to grow at rates above potential over the projection period, driving unemployment further below its estimated structural rate. Nevertheless, headline inflation is likely to decelerate significantly in the second half of 2006, reflecting a cut in the federal Goods and Services Tax, but should steadily move up to the upper limit of the monetary policy target range next year. In the context of rising inflationary pressures and buoyant economic growth, the Bank of Canada should continue with its tightening cycle. At the same time, fiscal settings at all levels of government should remain prudent and the federal government should focus on reducing the debt burden before ageing pressures accumulate.

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