5 February 2020

Economic fundamentals remain very strong

In his first speech of the year the Reserve Bank Governor confirmed the RBA expects the Australian economy to grow 2 ¾ per cent in 2020 and 3 per cent in 2021 consistent with the Government’s Mid-Year Fiscal and Economic Outlook.

At the same time, it is important to remember that the IMF is forecasting the Australian economy to grow faster this year than the United States, Canada, Germany, France, Japan and the United Kingdom and above the average of the OECD.

Despite international and domestic challenges in the form of trade tensions, the coronavirus, the drought and bushfires the RBA Governor has said that “Australia’s economic fundamentals remain very strong and they provide a solid foundation for us to be optimistic about our future” and that recent inflation and unemployment data “show things moving in the right direction”.

The Governor said there are a number of factors supporting the outlook including “the resources sector is in expansion mode”, “ongoing high levels of investment in infrastructure and the likelihood that the downswing in residential construction will come to an end later this year”.

However, the Governor did point out that challenges remain around consumer spending and productivity growth.

These are areas the Government continues to address though our economic plan which includes the largest tax cuts in two decades, our 10-year $100 billion infrastructure plan and 80,000 new apprenticeships.

Under our economic plan unemployment has fallen to 5.1 per cent and over 1.5 million new jobs have been created since we came to government.

As the Governor pointed out in his speech, “the Government’s low and middle income tax offset are allowing household to pay down debt more quickly than otherwise, and have driven the recent increases in house prices, which are expect to support an acceleration in consumption”.

The Australian economy has a remarkable story to tell and as the Governor notes “we enjoy a set of fundamentals and a standard of living that few other countries enjoy.”

Rather than back the economy and the creation of Australian jobs, the Opposition is recklessly putting its own self-interest ahead of the national interest talking down the economy and ignoring its remarkable resilience.