The broad outlook for OECD economies has improved in the past year, and output growth for the area as a whole is projected to rise to nearly 3% a year in 1997–98 (Table 1). Continued low interest rates in Japan, significant declines in interest rates in continental Europe, a firming of financial conditions in the United States and some other countries, and the strengthening of the dollar and sterling should all contribute to the projected convergence of growth rates. But countries still vary in the stage of their business cycles. Some are well into mature expansions with high levels of capacity utilisation, whereas others are still experiencing significant slack in labour and product markets, although this is generally diminishing