NO.108

In its latest Economic Outlook, the OECD presents another very positive report

on the outlook for the Australian economy.

Economic growth is projected by the OECD to be 4.2 per cent in 2000 and to remain

robust at around 3- per cent in both 2001 and 2002, higher than the growth rate

expected in each of the G7 countries and the total for the OECD countries generally.

The OECD forecasts that, with a continuation of solid growth, the unemployment rate

will fall further over the forecast period. In relation to inflation, the OECD states that

“measures of core inflation are still running at around 2 per cent”

and that the jump in headline inflation in the September quarter “is a one-off effect

from the introduction of the broad based GST.”

The OECD anticipates that the supportive global economic environment will see

Australian exports remain a “major source of growth”, and help to ensure a

further decline in Australia’s current account deficit.

In discussing the global outlook, the OECD notes that “Global economic growth

appears to have peaked during the first half of 2000, but world economic prospects remain

relatively bright, despite higher oil prices and a weakening in many equity markets.”

The OECD expects world growth to slow from 4- per cent in 2000, the fastest pace in more

than a decade, to a robust 4 per cent in 2001 and 2002.

CANBERRA

21 November 2000