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| Content Provider | OECD iLibrary |
|---|---|
| Organization | OECD |
| Abstract | The recovery has proceeded somewhat unevenly. While low interest rates and disposable income gains have spurred household spending, much of the bounce-back in GDP in the first half of the year was due to inventory adjustments. Government purchases have also supported demand, but a turnaround in business fixed investment has not yet materialised. Growth appears set to slow somewhat, as the impetus from household purchases wanes with lower equity prices and a stagnant labour market. Later, strengthening export markets and a sharper pickup in investment should underpin a more robust expansion. Inflation is likely to remain quiescent, reflecting persistent slack in product and labour markets, but the current-account deficit may widen further. Monetary policy has remained supportive. With recent signs that the labour market is weak and inflation subdued, interest rates should be kept low for the time being. But once the expansion gathers pace, they will need to be raised, moving steadily towards a neutral stance. Fiscal policy has loosened considerably as a result of new spending priorities and tax measures, and renewed restraintwill be needed to re-establish fiscal discipline. |
| Page Count | 9 |
| Starting Page | 37 |
| Ending Page | 40 |
| Language | English |
| Publisher | OECD Publishing |
| Publisher Date | 2002-12-24 |
| Access Restriction | Open |
| Subject Keyword | Economics |
| Content Type | Text |
| Resource Type | Chapter |
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