The Australian economy will grow by 1.5% during 2010 and 2.75% during 2011, with unemployment set to peak at 6.75%, according to the Federal Government’s mid-year budget outlook.
The figures are an adjustment from the 0.5% growth figure cited in the May budget, when the Government also predicted unemployment to peak at 8%.
“The 2009/10 Mid-Year Economic and Fiscal Outlook release today forecasts lower unemployment, higher growth, lower deficits and lower debt than expected at budget,” Federal Treasurer Wayne Swan said in a statement.
“The Australian economy is now expected to grow by 1.5% in 2009/10 and 2.75% in 2010/11 and the unemployment rate is forecast to peak at 6.75% in the June quarter 2010.”
But the forecast also noted tax receipts will remain $170 million lower than forecast in May. Net debt is set to peak at 10% of GDP in 2013-14, while the Government predicts deficits totaling $184 billion over the next four years.
“The decline in the terms of trade and reduced hours worked is expected to drag on domestic incomes, resulting in the weakest growth in nominal GPD (gross domestic product) in almost 50 years, and business investment and private demand are forecast to contract this financial year.”
In the US, investors were weary of data showing GDP growth of 3.5% in the September quarter, with analysts suggesting the recovery wasn’t strong enough to sustain a rally on the stock market. The Dow Jones Industrial Average fell 249.85 points or 2.51% to 9712.73.
Inflation falls during October
Meanwhile, inflation has fallen in October due to a drop in petrol costs with the annual pace now at a seven-year low.
The TD Securities-Melbourne Institute monthly inflation gauge fell by 0.3% in October, with the annual pace now at 1.2% down from 1.3% during September.
“The RBA Board meeting tomorrow will be adding these low inflation outcomes to the broad mix of data relied upon to assess the current stance of monetary policy,” TD senior economist, Annette Beacher, said in a statement. “Purely on inflation grounds there could be a case for pausing.”
“However, as the RBA places more weight on Australia’s export outperformance and strong trade links with China, a revival of house price inflation and the gradual normalising of market conditions, this means another hike to 3.5% remains the highest possible outcome.”
Manufacturing activity has continued to grow for a third consecutive month during October, according to the latest Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index.
The index, which is seasonally adjusted, fell just 0.3 points to 51.7, still above the 50-point level separating expansion from contraction.
“While the lift in manufacturing activity over the past three months and rising new orders in particular are welcome, growth is not accelerating and there remains a considerable way to go before we recover the ground lost over the past year. A period of sustained improvement in new orders and production will be needed to reverse the continuing fall in manufacturing employment,” AIG chief executive Heather Ridout said in a statement.
Coca-Cola Amatil managing director Terry Davis has signed a new 12-month rolling contract with the company.
“Securing an agreement which facilitates Terry’s services to continue beyond 30 November, 2011 is in the best interests of CCA and its shareholders,” chairman David Gonski said. “Mr Davis continues to perform impressively and maintains the enthusiasm to deliver continued success.”
Tim Foster new Stockland CFO
Property company Stockland has now announced Tim Foster as its new chief financial officer to replace Hugh Thorburn. Managing director Matthew Quinn said the appointment was a good choice.
“Tim is an experienced CFO and I look forward to him joining our executive team,” Quinn said in a statement. “Hugh has played a pivotal role at Stockland and I would like to thank him for his significant contribution over the past six years.”
World Bank managing director Juan Jose Daboub says Australia can serve as a model for other countries emerging from the global financial crisis.
“The many reforms that you have taken on in the last 20 years have paid off,” he told the Sky Business Channel, which he said included flexible labour markets and an open economy. “I look at Australia as a model that others can follow.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
