The OECD Economic Outlook released tonight confirms that the Australian economy will significantly outperform OECD economies as a whole over this year and next.
Australia’s economic fundamentals remain strong, with our economy expected to grow more strongly than every single major advanced economy over the next two years. The OECD forecasts our growth to be 3.1 per cent in 2012 and 3.7 per cent in 2013.
By contrast the OECD expects a muted and fragile recovery in many other advanced economies, largely due to the lingering effects of past global turmoil and very challenging economic conditions facing Europe.
The European sovereign debt crisis continues to be the most significant risk to the global outlook, with recent political developments in Greece resulting in greater financial market volatility.
Against this backdrop, the OECD expects growth across OECD economies to remain at 1.6 per cent in 2012 before picking up to 2.2 per cent in 2013.
However, the OECD expects that emerging economies particularly in our own region will continue to grow strongly.
The OECD expects that China’s economy will grow at 8.2 per cent in 2012, before picking up to 9.3 per cent in 2013. India’s economy is expected to grow at 7.1 per cent in 2012 and 7.7 per cent in 2013.
The OECD also expects that Australia’s unemployment rate will remain substantially lower than the 7.9 per cent unemployment rate expected for the OECD as a whole in 2013, and around half of the 11.1 per cent forecast for the euro area in that year.
The OECD has applauded the Government’s commitment to return to surplus, stating that:
“restoring fiscal leeway while macroeconomic conditions are still favourable, and the terms of trade high, is welcome.”
Despite the structural transitions underway in the Australian economy, our economic fundamentals remain strong, with solid economic growth, low unemployment, contained inflation, strong public finances and a record pipeline of business investment.
The 2012-13 Budget ensures that the Australian economy remains amongst the strongest in the developed world, by delivering four years of surpluses to provide a buffer in uncertain global times and give the Reserve Bank room to cut interest rates further should it decide to do so.
The Budget also helps spread the benefits of the boom by delivering financial relief for millions of low and middle income households and businesses which aren’t in the fast lane of the mining boom.