The Organisation for Economic Co-operation and Development (OECD) is the latest international institution to recognise the current strength of the Australian economy, describing our growth as “robust” and “projected to continue at a robust pace”.
In its biannual Economic Outlook, the OECD upgraded its projection of Australia’s 2018 real GDP growth by 0.2 per cent to 3.1 per cent, well above the OECD average.
The OECD also noted, “The unemployment rate has reached its lowest level in five years and labour participation has risen to levels last seen during the mining investment boom.”
Importantly, the OECD finds, “rising employment is boosting incomes and consumption” and “growth of wages… will rise gradually, while the unemployment rate will edge lower”.
The Government’s strong and disciplined budget management, which has seen the deficit drop to its lowest level in a decade, is also acknowledged by the OECD. It notes our debt-to-GDP ratio “remains relatively low”, providing “sufficient room to support activity… in the event of an unexpected downturn”.
The report notes the Australian housing sector has recently seen prices fall, warning “unexpectedly large corrections in house prices could reduce household wealth and consumption, and impact the construction sector.” As the OECD says, “given the potential financial and macroeconomic risks [from the housing market], supervisors should remain vigilant”.
The OECD’s assessment builds on recent findings from global credit rating agencies, Standard & Poor’s and Fitch, which reaffirmed Australia’s AAA credit rating and the International Monetary Fund which recognised our budget management and strong economic growth.
The Coalition Government’s economic plan is delivering a stronger economy helping us to deliver the essential services Australians rely on. On top of this, unemployment is down to five per cent and there are now more than one million additional people in work than when we came into office five years ago.
Looking abroad, global growth is projected to have now peaked at 3.7 per cent and the OECD warns that “the global economy is navigating rough seas” and “policy makers will have to steer their economies carefully”.
Australia cannot risk a return to Labor’s high tax and spend approach.