The current Australian economy is performing significantly well and the future prospects looks positive, given the unfavourable global environment. Australia continues to be a world leader in the global recovery, with lower unemployment, lower debt and stronger growth than other countries. Australia’s economy is expected to grow by 3.25 percent in late 2010 and 3.75 percent in 2011 (Table 1) (RBA, 2010). This follows a further growth in employment with jobs increasing by 353,200 over the past year (Wayne Swan, 2010). However due to global uncertainty, consumer confidence and the increased financial market volatility could start to impact on the growth of Australia.
Table 1: Output Growth and Inflation Forecasts
Per cent, over year to quarter shown
| Dec2009| June2010| Dec2010| June2011| Dec2011| June2012| Dec2012| GDP growth| 2.7| 2½| 3¼| 3¾| 3¾| 3¾| 4|
Non-farm GDP growth| 2.5| 2½| 3¼| 3¾| 3¾| 3¾| 4| CPI inflation| 2.1| 3¼| 3¼| 3| 2¾| 3| 3|
Underlying inflation| 3¼| 2¾| 2¾| 2¾| 2¾| 3| 3|
Source: RBA, 2010
The early stages of the economic recovery shows the pace of growth remains uneven with some advanced economies still fragile, with concerns with US growth and European debt , while Asia is rapidly growing with growth forecasts for China from 10.0 to 10.5 percent in 2010 (Wayne Swan, 2010). Due to this growth and support of Asia, public investment and exports will be the key growth engines for Australia in 2011 and 2012, along with the housing construction boom (Rowan Callick, 2010). This will follow an increase in GDP and will continue to strengthen with the help of the monetary and fiscal stimulus by increasing consumer confidence through supporting the economy, which in turn will increase spending in households. The strong recovery in the Asian region has helped Australia emerge from the global downturn and has dramatically increased Australia's main...