The OECD Economic Outlook released overnight in Paris puts Australia near the top of the tree for economic growth during 2012, behind Korea, Mexico and Chile. While Australia’s economy is set to grow at 3.1% this year, close to the budget forecast, the United States should grow at a lower 2.4 per cent, the United Kingdom 0.5 per cent, and Italy and Greece should slide further into recession.
The report credits the mining boom for keeping Australia ahead of the pack but says consumer caution and the “persistently high exchange rate” are holding other parts of the economy.
Dislocation caused by high dollar is “generating substantial uncertainties that could weigh on employment, confidence and growth, with potential negative spillovers on house prices”.
Australian house prices along with those in Canada, France and Sweden are still “very high relative to rents and incomes,” pointing to further falls...
Welcoming the report Treasurer Wayne Swan acknowledged it painted a picture of a patchwork economy.
Tackling those pressures was central to the Spreading the Benefits of the Boom package in the May budget.
The report endorses the budget strategy saying the decision to concentrate budget cuts on defence and foreign aid should “limit the negative impact on activity”. It finds Australia’s combined state and federal government debt amongst the lowest of any member nation.
The OECD finds global prospects “somewhat brighter” than six months ago, with the immediate risks “contained so far”. It says the United States and Japan are enjoying a gradual “post-crisis healing,” but in Europe confidence is weak and financial markets volatile.
The Outlook forecasts no economic growth in the euro region this year, a more optimistic assessment than that of Australia’s Treasury which expects a recession of 0.75 per cent. It says China’s economy should grow 8.2 per cent, India’s 7.1 per cent, and the OECD as a whole 2.2 per cent.
Projections to 2050 give Australia the highest growth rate in the developed world after Chile and Mexico. China is set to overtake the United States as the world’s biggest economy in 2017. India and Indonesia will grow faster than China from 2020.
Australia’s trade minister Craig Emerson yesterday signed a free trade agreement with Malaysia promising immediate tariff-free entry of 97.6 per cent of Australian exports, climbing to 99 per cent by 2017. In return Malaysia will enjoy the same access to Australia as Singapore.
The agreement holds back several Australian exports. Large Australian cars of the kind not usually exported to Malaysia will get immediate duty-free access. Smaller more competitive cars such as the Holden Cruze will wait until 2016. Tariffs on Australian rice meant for retail sale in Malaysia will remain until 2023. Tariffs on wholesale rice will remain until 2026.
In today's Canberra Times, Sydney Morning Herald and Age
Australia OECD 2012 Economic Outlook
BUT FOR NOW...
Developed nations economic growth in 2012
Mexico 3.6%
Korea: 3.3%
Australia: 3.1%
United States: 2.4%
Canada: 2.2%
Japan 2%
New Zealand: 1.9%
Germany: 1.2%
France: 0.6%
Ireland: 0.6%
United Kingdom: 0.5%
Netherlands: - 0.6
Italy -1.7%
Greece -5.3%
OECD Economic Outlook, 2012
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