A couple of recent economic forecasts, from the Treasury and my former Treasury colleague Peter Downes, suggest the Australian economy will remain resilient and may even surprise us with stronger than expected performance:
Both these forecasts will have factored in the expected interest rate cut in May. Treasury’s forecast is for respectable growth, but at 3.25% growth we probably won’t see as substantial a drop in the unemployment rate (currently at 5.2% nationally) as in Downes’s forecast, which has unemployment dropping to 4.5%. Downes’s justification for the significant drop in unemployment is the mining boom, as reported in regional newspapers yesterday:
AUSTRALIA’S unemployment rate could hit 4.5 per cent by next year if the mining boom continues its relentless growth, says former Treasury official Peter Downes.
The Australian Bureau of Statistics (ABS) has forecast the mining sector to reach a record level of growth, moving from 6 per cent of gross domestic product to some 9 per cent of GDP in the 2010-11 financial year.
Mr Downes, former Treasury official and now an Outlook Economics director, said recent economic modelling showed that the growth in the mining sector could see more people picking up jobs across the board.
“The forecast that the unemployment rate gets down to 4.5 per cent next year is contingent on the mining boom,” he said.
“A lot of the coming investment, particularly in plant and equipment, has a fairly high leakage with a lot of that feeding back into the rest of the economy.”
Obviously, Queensland will play a large role in the national economic growth story. Our new Queensland Government has signalled a strong commitment to economic development with its fast-tracking of a coal mine on Cape York, opposed by environmentalists but supported by the local Indigenous economic development organisation, Balkanu (which I have consulted to but not on this project). The Courier-Mail has coverage here: