Economic statement predicts good times ahead


Australian economy and jobs market are expected to improve in the coming years, according to economic forecast

July 14, 2010

The Australian economy and jobs market are expected to improve in the coming years, according to an updated economic forecast from the Federal Government.

Despite highlighting concerns over the state of international economies, the economic statement expects the domestic market to gather momentum this financial year and in 2011-2012 due to a rise in trade and investment on the back of the mining boom.

The statement anticipates GDP to grow by 3 percent this financial year and 3¾ per cent in 2011 12 and for more jobs to be created on the back of 353,000 new positions this year.

"Australia's unemployment rate, which is already lower than any of the major advanced economies, is still expected to fall further to 4¾ per cent in late 2011 12," Treasurer Wayne Swan says.

The unemployment rate is currently 5.1 percent.

The Budget is still expected to return to surplus ahead of any of the major advanced economies in 2012-2013.

Following a deal with major mining companies on a proposed resources rent tax, the Government expects to pocket $10.5 billion instead of $12 billion originally forecast.

The money is intended to deliver a 1 percent company tax rate, increase superannuation and fund infrastructure projects in resource rich states.

INTERNATIONAL UNCERTAINTY
Despite positive domestic projections, the economic statement warns of uncertainty in international markets, saying the outlook is clouded by "substantial downside risks".

"Continuing concerns over sovereign debt sustainability and banking sector weaknesses in the EU periphery are likely to be an ongoing source of volatility in financial markets," the statement says.

It also cites uncertainty over US growth prospects and China’s challenge in reining in inflation.

But the statement goes on to say Australia’s close ties with Asia and its strong financial position means it is well placed to absorb global uncertainties.

"…Australia is particularly well placed, with one of the strongest budget positions in the developed world," the statement says.

But while saying the economy is strong, Swan adds that many Australians are still under financial pressure.

He says the third round of tax cuts that came into effect on July 1 and tax rebate will deliver some relief.


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