In 2009, falling exports are projected to result in some slowdown in domestic demand. With the gradual recovery of the global economy and easier financial conditions, growth is projected to gradually regain momentum.

The extent of the deterioration in the fiscal position prior to the slowdown has reduced the scope for discretionary fiscal policy action. Indeed, the new government will face the need to restore fiscal discipline, speed up structural reform and increase sales of public-sector assets. Any further easing in policy should be achieved through lower interest rates, rather than discretionary fiscal expansion. The growing use of protectionist measures is a cause for concern.

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©OECD Observer No 274, July 2009