Australia: Drought challenge
A pick-up in export volumes is likely to bring output growth gradually back up above the trend rate of over 3% by 2008, despite a decline in the terms of trade and a cooling of the business investment boom. However, growth will be held back in 2007 by the effect of a drought on the agricultural sector.
Interest rates are close to a level that should ensure inflation returns to the target over the coming year. A modest fiscal surplus should be maintained, as buoyant tax receipts related to the commodities boom will be transitory. Skill shortages have threatened to reduce growth and prompted the recent announcement of a new skills initiative. Constraints on trading water need to be removed so that scarce water moves to higher value uses.
|Population (000s), 2005||20 329|
|Area (000 sq km)||7 687|
|GDP (Billion USD), 2005||672.9|
|Life expectancy at birth (Women, Men), 2004 ||83.0, 78.1|
|Total labour force (000s), 2005||10 575|
|Government type||Independent Federal State, UK Monarch|
|Indicators||% change unless otherwise indicated|
|Household savings ratio||-1.7||-0.8||-1.2|
|Consumer price index||3.7||2.8||2.5|
|Unemployment rate (%)||5.0||5.0||5.1|
|General government financial balance|
|Current account balance (% GDP)||-5.5||-5.6||-5.2|
No. 258/259, December 2006