Today I will address the Australian Business Forum in London on the topic of Australia's macroeconomic and financial resilience in the face of global economic challenges.
This is an important opportunity to outline to key British business leaders the underlying strengths of the Australian economy, and the Rudd Government's plans to modernise it.
Present in the audience will be prominent members of the UK business community, the financial sector and those with a key interest in the British-Australian bilateral relationship.
The US economy has slowed considerably and turbulence on global financial markets, higher borrowing costs and record oil prices have had significant effects on many national economies – including the Australian economy.
Although the global economy is expected to slow in 2008 and 2009 due largely to weakness in advanced economies, Australia is in a good position to weather this downturn.
The Australian economy is about to enter its 18th year of continuous expansion. Real GDP is forecast to grow by 2¾ per cent in 2008‑09, which is well above the IMF's growth outlook for advanced economies overall.
While Australia has not been immune from recent turbulence on global financial markets, compared with many other countries, our financial sector and regulatory system have proved very resilient.
This turbulence on global financial markets follows several years of strong demand for Australian resources which has not been matched by investment in the Australia's supply capacity. As a consequence, underlying domestic inflationary pressures have built significantly in recent years.
Upward pressure on global food and energy prices is adding to broad-based inflationary pressures. Accordingly, tackling inflation is a key focus of the Australian Government's recent Budget. The Government has been highly disciplined, with all new spending more than offset by savings.
The Budget addresses the challenge of high inflation with a substantial surplus of 1.8 per cent of GDP, significant investments in health, education and infrastructure, as well as measures aimed at lifting productivity and expanding workforce participation.
The Rudd Government is committed to modernising the Australian economy to put downward pressure on inflation, safeguarding it against difficult global conditions, and secure our future prosperity.