The Organisation for Economic Co-operation and Development says the Australian economy has seen robust growth, upgrading its projection of the country’s 2018 real GDP growth.
In its biannual ‘Economic Outlook’, the OECD increased its projection of Australia’s GDP growth by 0.2 of a percentage point to 3.1 per cent, well above the OECD average.
“The unemployment rate has reached its lowest level in five years and labour participation has risen to levels last seen during the mining investment boom,” the OECD noted.
The report also says rising employment is boosting incomes and consumption, and that wage growth will rise gradually, while the unemployment rate will lower.
It also states that Australia’s debt-to-GDP ratio remains relatively low, providing sufficient room to support activity in the event of an unexpected downturn.
The report notes the Australian housing sector has recently seen prices fall, warning “unexpectedly large corrections in house prices could reduce household wealth and consumption, and impact the construction sector.”
The OECD also adds that, given the potential financial and macroeconomic risks from the housing market, supervisors should remain vigilant.
The OECD’s assessment builds on recent findings from global credit rating agencies, Standard & Poor’s and Fitch, which reaffirmed Australia’s AAA credit rating and the International Monetary Fund which praised the nation’s budget management and strong economic growth.
Looking abroad, global growth is projected to have now peaked at 3.7 per cent, with the OECD warning that “the global economy is navigating rough seas” and “policy makers will have to steer their economies carefully.”
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