The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

26 May 2010

NO.044

OECD Economic Outlook – May 2010

The latest OECD Economic Outlook highlights that Australia's economic growth and employment outlook is amongst the best in the OECD and has welcomed the Government's fiscal settings and strategy in the 2010-11 Budget.

The OECD notes that the global recovery has become increasingly widespread over the past year, but also points to continued risks to recovery, particularly from the instability in some European sovereign debt markets.

The OECD report is a reminder of the strong economic management that has seen Australia fight off the global recession and which is returning the Budget to surplus three years early and halving peak debt.

The OECD has revised up its growth forecasts for Australia and expects GDP to grow by 3.2 per cent in 2010 and 3.6 per cent in 2011.

This growth outlook is one of the strongest amongst all OECD economies and is well above the growth forecast for the OECD area as a whole of 2.7 per cent in 2010 and 2.8 per cent in 2011.

The OECD expects Australia's unemployment rate to fall to 4.8 per cent by the end of 2011. This is dramatically lower than the 8 per cent unemployment rate expected for the OECD area as a whole.

The OECD welcomes the 2010-11 Budget settings, stating that "[i]n view of the stronger economy and fiscal restraint, the government now expects to balance its budget by 2012/13, three years earlier than previously anticipated".

The OECD states that "[m]anaging the exit strategy from the crisis is less problematic in Australia than in most OECD countries. The current tightening of monetary and fiscal policy is welcome given the rebound in activity."

The OECD also notes in relation to Australia that "[c]ompanies in the mining sector should benefit in particular from the dynamism of Asian markets and the significant pick-up in the terms of trade."

According to the Economic Outlook, the global recovery has become increasingly widespread over the past year, despite progressing at different speeds across countries and regions. The OECD expects global output growth of around 4½ per cent this year and in 2011.

However the report also stresses that risks remain to the global recovery. The OECD welcomes the actions of European governments and the European Central Bank, but adds that "the region's underlying weaknesses are far from settled."

Against this backdrop, the OECD has highlighted the challenge facing some developed countries in exiting from fiscal support packages and implementing fiscal consolidation strategies and policies to support sustainable growth.

The OECD report illustrates that Australian Government finances are amongst the strongest in the developed world, reporting lower debt than any of the other OECD countries.

The Budget halved the expected peak in net debt and projects a return to surplus in three years, three years early and ahead of any of the major advanced economies.

The OECD report also highlights the importance of growth-enhancing structural reforms to ensure countries can grow sustainably over the medium term. Sustainable global growth will be one of the major topics of the G20 Finance Ministers' Meeting that I will attend in June.

It's in Australia's interests to keep doing the hard work through the G20 to help build a sustainable global recovery, while maintaining the flexibility to do what is right for our own economy.

The Government is working hard to secure our economic future and build a stronger economy for Australian families.

CANBERRA
26 May 2010