Australia: Relatively robust recovery
Having been less affected by the crisis than most other OECD countries, Australia is likely to experience a relatively more robust recovery. Large public transfers and tax incentives stimulated private consumption and capital expenditure by firms. In addition, strong imports by China and other dynamic Asian economies buoyed exports of mining products. Growth is projected to pick up to 2.5% in 2010 and 3.5% in 2011, with unemployment peaking at around 6.25% in 2010 and inflation moderating.
Current economic trends and the reduction in negative macroeconomic risks argue in favour of a gradual tightening of monetary policy. Furthermore, the planned reduction of the federal budgetary stimulus seems to be an appropriate response to the needs of the economy. To maximise the positive impacts of their investment programme, the authorities should submit proposed projects more systematically to a rigorous and transparent cost-benefit analysis.
©OECD Observer 2010