Australia's Growth Potential Best In The World

Source: Government of Australia Posted on: 1st June 2010

The OECD has cited Australia's growth potential as ‘clearly standing out as the best' in the world over the medium term.

After weathering the crisis well in 2009, the Australian economy is projected to experience strong growth in 2010 and 2011, above its trend rate.

Activity might expand by as much as 3¼ per cent and 3½ per cent in these two years, driven by booming exports and domestic demand. The unemployment rate is expected to fall below 5% by the end of 2011, in a context of moderate inflation.

Managing the exit strategy from the crisis is less problematic in Australia than in most OECD countries. The current tightening of monetary and fiscal policy is welcome given the rebound in activity.

To maintain robust and balanced growth in the medium term, the economy’s supply capacity must be strengthened, including in the real estate sector where demand, bolstered by immigration, is expected to remain strong.

The OECD notes that ‘after weathering the crisis well in 2009, the Australian economy is projected to experience strong growth in 2010 and 2011, above its trend rate. Activity could expand by as much as 3.25 per cent and 3.5 per cent in these two years, driven by booming exports and domestic demand.

The unemployment rate is expected to fall below 5 per cent by the end of 2011, in a context of moderate inflation’.

A recent IMF working paper projects that Australian investment is expected to grow on average by 6.2 per cent annually during the period, 2010-15.

In a separate report, CEDA (the Committee for Economic Development of Australia), has commented that strong demand from Asia has boosted Australia’s position.

Australia has been ranked fifth in overall competitiveness in the just-released IMD 2010 World Competitiveness Yearbook, up two spots from a 2009 ranking of seventh.

The World Competitiveness Scoreboard looks at 58 economies and uses 327 criteria across four different competitiveness factors: economic performance, government efficiency, business efficiency and infrastructure, to produce an overall competitiveness ranking.

In economic performance – which includes 76 factors such as size, growth, wealth, forecasts, international trade and international investment – the IMD ranked Australia seventh, a huge improvement from the previous year at fifteenth.

The highly regarded Yearbook also observed that Australia has benefited from the implementation of efficient policies, including government efficiency.
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