The OECD’s latest Economic Outlook forecasts Australia will record a solid economic performance over the next two years.
The OECD forecasts Australian economic growth of 2.5 per cent in 2013 and 2.6 per cent in 2014, accelerating to 3.1 per cent, around its potential rate, in 2015. This will be above the OECD average of 2.7 per cent.
The Economic Outlook notes that the domestic economy is undergoing structural change, with a slowing in mining investment likely to be offset by rising mining exports and a gradual strengthening of non-mining sectors. The risks to the Australian economy are assessed as balanced.
One concern is that the OECD expects the unemployment rate to rise above 6 per cent in 2014 and 2015. This is in line with Treasury forecasts.
While global growth is expected to gradually strengthen over the coming years, the OECD notes that long-standing downside risks remain and new concerns have emerged.
Existing concerns include the re‑escalation of the euro area crisis and the Japanese fiscal situation. Added to this is uncertainty in the United States surrounding fiscal policy, and the eventual normalisation of monetary policy which, while a welcome signal of recovery, could expose vulnerabilities in emerging market economies.
As a result, the OECD has downgraded its forecasts for world growth to 2.7 per cent in 2013 and 3.6 per cent in 2014, with growth to lift to 3.9 per cent in 2015.