After a strong 2016, the economy is expected to continue to grow this year and next, despite a slow start, an OECD report revealed on Wednesday.
Expanding 4 per cent in 2016 following a surge late in the year, growth is expected to hover around 3.5 per cent in 2017-2018, with inflation firming up gradually and wages projected to rise, according to the OECD Economic Outlook for 2017.
Due to a sharp increase in public spending, the budget deficit is expected to rise to 2.9 per cent of GDP in 2017 and 2018, following a 2.1 per cent deficit in 2016, the report said. While this budgetary expansion is only likely to stimulate growth moderately, it could foster a more inclusive economy by increasing spending on housing for young families and on transport, according to the OECD.
“These developments would be further enhanced in the event that the additional measures, worth some 0.3 per cent of GDP, recently announced by the minister of finance (but not included in the projections) to increase the employment rate of parents of young children and raise invalidity pensions were to be adopted,” the report said.
