ID :
21105
Thu, 09/25/2008 - 16:15
Auther :
Shortlink :
https://oananews.org//node/21105
The shortlink copeid
Australia should weather downturn: IMF
AAP - The jobless rate will rise as a result of the economy feeling the impact of the global financial market meltdown, federal Treasurer Wayne Swan has warned.
New data released on Wednesday also points to a sharp slowdown in hiring intentions,
making the case for further interest cuts more likely, economists say.
Still, a new appraisal by the International Monetary Fund (IMF) has given its tick
of approval to the Labor government's first budget, the Reserve Bank of Australia's
stance on interest rates, and the soundness of the local banking and regulatory
system.
Directors of the IMF, in an annual report of Australia released overnight, commended
local authorities on their "impressive" economic management in the fiscal, monetary
and structural areas which have spurred a long-lasting economic expansion.
"Directors considered that the sound macroeconomic framework should permit Australia
to weather the global downturn and contain inflation pressures," it said.
However, the IMF warns the risk to inflation remains on the upside, and that
interest rates would have to be lifted quickly if domestic demand does not slow as
expected.
Mr Swan described the report as a "very big tick" for the government's economic
management.
"We are in a better position to withstand the fallout from these (international)
events than, perhaps, any other country in the world," he told ABC Radio.
"But we are not immune and it will certainly will have an impact on domestic growth,
that certainly has an impact on employment growth and you will see, on our current
budget forecasts, a modest increase in unemployment."
The government is forecasting the jobless rate will rise to 4.5 per cent on average
in 2008-09, against a rate was of 4.1 per cent in August.
New government data, released on Wednesday, shows skilled vacancies - a pointer to
future employment growth - dropping a further 3.5 per cent in September to stand
17.1 per cent lower than a year earlier.
TD Securities senior strategist Joshua Williamson said the data drew a line in the
sand for the resilient employment results to date.
"Although the credit crisis and market volatility has hogged the spotlight, this is
a reminder that the slowdown will work its way through the economy and push the
unemployment rate higher," Mr Williamson said.
"The broadening in the slowdown away from household consumption should remind people
that there are domestic reasons why the RBA needs to keep easing interest rates and
that the IMF report warning of higher inflation and the possible need for higher
interest rates is yesterday's news."
Financial markets are fully pricing a cut in the RBA's key official cash rate to
6.75 per cent from 7.0 per cent next month.
The IMF is forecasting gross domestic product growth of 2.7 per cent in 2008,
compared with 4.3 per cent in 2007.
"There is no doubt growth will slow," Mr Swan told Sky News.
"There is no doubt the events in the United States have impacted upon business
confidence."
Commonwealth Securities chief economist Craig James said there was a big risk of
confidence sliding further, and possibly a US recession, should the US government's
$US700 billion bailout plan for US banks not be passed by the US congress, or the
plan ends up in a watered-down form.
"While other countries would attempt to shore up their economies, the impact of
recession in the US would spread through the globe."
New data released on Wednesday also points to a sharp slowdown in hiring intentions,
making the case for further interest cuts more likely, economists say.
Still, a new appraisal by the International Monetary Fund (IMF) has given its tick
of approval to the Labor government's first budget, the Reserve Bank of Australia's
stance on interest rates, and the soundness of the local banking and regulatory
system.
Directors of the IMF, in an annual report of Australia released overnight, commended
local authorities on their "impressive" economic management in the fiscal, monetary
and structural areas which have spurred a long-lasting economic expansion.
"Directors considered that the sound macroeconomic framework should permit Australia
to weather the global downturn and contain inflation pressures," it said.
However, the IMF warns the risk to inflation remains on the upside, and that
interest rates would have to be lifted quickly if domestic demand does not slow as
expected.
Mr Swan described the report as a "very big tick" for the government's economic
management.
"We are in a better position to withstand the fallout from these (international)
events than, perhaps, any other country in the world," he told ABC Radio.
"But we are not immune and it will certainly will have an impact on domestic growth,
that certainly has an impact on employment growth and you will see, on our current
budget forecasts, a modest increase in unemployment."
The government is forecasting the jobless rate will rise to 4.5 per cent on average
in 2008-09, against a rate was of 4.1 per cent in August.
New government data, released on Wednesday, shows skilled vacancies - a pointer to
future employment growth - dropping a further 3.5 per cent in September to stand
17.1 per cent lower than a year earlier.
TD Securities senior strategist Joshua Williamson said the data drew a line in the
sand for the resilient employment results to date.
"Although the credit crisis and market volatility has hogged the spotlight, this is
a reminder that the slowdown will work its way through the economy and push the
unemployment rate higher," Mr Williamson said.
"The broadening in the slowdown away from household consumption should remind people
that there are domestic reasons why the RBA needs to keep easing interest rates and
that the IMF report warning of higher inflation and the possible need for higher
interest rates is yesterday's news."
Financial markets are fully pricing a cut in the RBA's key official cash rate to
6.75 per cent from 7.0 per cent next month.
The IMF is forecasting gross domestic product growth of 2.7 per cent in 2008,
compared with 4.3 per cent in 2007.
"There is no doubt growth will slow," Mr Swan told Sky News.
"There is no doubt the events in the United States have impacted upon business
confidence."
Commonwealth Securities chief economist Craig James said there was a big risk of
confidence sliding further, and possibly a US recession, should the US government's
$US700 billion bailout plan for US banks not be passed by the US congress, or the
plan ends up in a watered-down form.
"While other countries would attempt to shore up their economies, the impact of
recession in the US would spread through the globe."
