Developments in individual OECD countries

Abstract

The sharp contraction that began in the last quarter of 2008 intensified in the first quarter of 2009, led by collapsing exports, fixed investment and stockbuilding. The pace of contraction appears to be slowing, but recessionary conditions are expected to linger through the third quarter, with only a slow recovery thereafter. Unemployment is projected to keep rising until early 2010 and inflation pressures to stay muted. The Bank of Canada lowered its policy rate effectively to zero and exceptionally committed to holding the rate at this level until the end of June 2010, conditional on the inflation outlook. Supplementary monetary measures do not appear warranted for now, but the fiscal authorities retain room for further temporary fiscal stimulus should the recovery fail to materialise as expected in the latter part of this year.