The OECD Economic Outlook released today provides further evidence that Australia is outperforming every other advanced economy in the face of a savage global recession.
This report confirms that Australia has the strongest performing economy in the OECD, with lower debt and lower deficits than any major advanced economy.
The report also confirms that the Rudd Government's stimulus measures are working to support jobs, strengthen the economy and cushion Australia from the worst impacts of the global recession.
In particular, the OECD points to the Government's nation-building investments as a key support for the Australian economy, noting "The infrastructure development programme announced in the 2009-10 Budget is welcome and should strengthen fiscal policy impact."
The report also confirms Australia has the lowest government borrowing among the OECD countries, other than Luxembourg.
The OECD forecasts output in its 30 member economies to contract by 4.1 per cent in 2009. By comparison, the OECD expects the Australian economy to contract by 0.4 per cent in 2009, which is the mildest contraction of any of the 30 OECD economies and ten times smaller than the contraction expected across the OECD.
A modest recovery is expected from late 2009, with the Australian economy expected to grow by 1.2 per cent in 2010.
Despite Australia's stronger outlook, the OECD notes that we will not be immune from the impacts of the global recession. The OECD forecasts the unemployment rate in Australia will reach 7.9 per cent by the end of 2010. Whilst too high, this is still significantly lower than the forecast of 9.9 per cent unemployment across the OECD as a whole, and provides further evidence of the importance of the Government's stimulus measures to support Australian jobs.
The OECD points out that substantial fiscal and monetary policy stimulus, along with efforts to repair the financial sector, have avoided the worst of the global crisis. The OECD notes that in the current environment, government budgets have provided a "very important cushion for economic activity in the downturn".
While the OECD observes that the rate of contraction within the OECD region is moderating following the deepest decline in activity in the post-war era, it also warns that the global economy still faces a very difficult period ahead.
Importantly, the OECD cautions that the negative economic and social consequences of the global recession will be long-lasting, which is exactly why the Rudd Government has acted so decisively through its three stages of fiscal stimulus to support jobs and invest in nation-building.
Clearly there are still major challenges ahead for the Australian economy – particularly rising unemployment, but this OECD report shows the Government's actions are clearly cushioning Australia from the worst impacts of the global recession.
24 June 2009