Economic Report December 2011
15 December, 2011 | Report
The Australian economy grew by a relatively strong 1.0% in the September quarter, with real GDP up by 2.5% over the year.
Most of the growth occurred in the Mining and Construction industries - between them these two industries accounted for 0.7 percentage points of the 1% growth. Although growth in the quarter was somewhat strong, the “multi-speed” economy remains a concern.
Around mid-year, it was thought that growth would be above its long-term average in 2011-12. Instead, instability and uncertainty from Europe and elsewhere has undermined confidence and weakened conditions.
This led both the Reserve Bank and the Government to reduce their forecasts for growth in the year ahead.
Growth is now expected to be around its trend level, though there is even more uncertainty that usual surrounding this forecast. Policymakers will be watching developments in Europe closely – the ACTU has called on the Government to be prepared to delay its planned return to surplus if conditions deteriorate, in order to support Australian jobs.
Even in the absence of a significant further slowdown in Europe, late 2011 may well turn out to be a turning point of sorts for the Australian economy.
Treasury and the RBA both think the terms of trade have hit their peak and will now slowly fall. Influential economists Peter Sheehan and Bob Gregory have written that the net effects of the resources boom have “been strongly positive but have now peaked”.
This Economic Report forms part of a new suite of regular reports by the ACTU, along with a Jobs Report and a Wages Report, each of which will be released quarterly.
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