However, major policy stimulus should contribute to modest positive growth next year.
Receding inflation has enlarged the scope for monetary easing, which remains the front line of macroeconomic stabilisation. The deteriorating outlook for public finances, with high external debt, has led the government to trim the initially planned policy stimulus in its recent budget. It should realign spending with the now postponed but still desirable cuts in marginal tax rates, which would improve persistently low productivity growth.
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©OECD Observer No 274, July 2009