Monthly goods trade data point to a sharp fall in both imports and exports. Business sentiment has deteriorated rapidly and the number of business bankruptcies has soared. GDP is projected to contract sharply in 2009.
The capacity pressures evident in recent years have disappeared and economic slack is widening. There would be scope for additional fiscal policy stimulus in 2010. Monetary policy should be eased in line with policy in the euro area and as foreign exchange market conditions allow.
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©OECD Observer No 274, July 2009