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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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Spain

Driven by strong domestic demand, output growth reached 3.4% in 2005 and once again outpaced the European Union average. The dynamism of activity should moderate somewhat in 2006 and 2007, even though growth will remain robust at a level slightly above potential rates. In the absence of further oil price hikes, inflation could decelerate, but the differential with the euro area is likely to persist, further weighing on competitiveness. A tighter fiscal policy is desirable not only to moderate domestic demand pressures, but also to prepare for the fiscal consequences of ageing. Overcoming the inflation differential will require fostering competition, in particular in the retail distribution sector, and correcting current deficiencies in the wage-bargaining system. Reducing the segmentation of the labour market would also contribute to enhancing productivity performance, which remains poor.

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