Australia’s economic performance is proving the “doomsayers” wrong, Treasurer Wayne Swan said ahead of a government conference this week to address challenges including an elevated currency and uneven growth.
A 4.3 percent expansion in the first quarter from a year earlier and the addition of 38,900 jobs in May were standout achievements, Swan said in his weekly economic note yesterday. Capitalizing on growth opportunities is a topic at Prime Minister Julia Gillard’s economic forum in Brisbane on June 12-13, he said.
Public support for Gillard’s government isn’t getting a lift from one of the fastest-growing economies in the developed world, led by the resource-rich regions in the north and west. Consumer confidence is subdued and her governing Labor Party trails in opinion polls as tourism, manufacturing and retail industries across the south and east struggle with the sustained strength of the local currency.
“There are always those who are all too ready to talk down our nation’s prospects,” Swan said. “Over the past week, the doomsayers have been proved to be completely and absolutely wrong.”
The Australian dollar rose 2.2 percent against the U.S. currency last week, and has appreciated about 41 percent since the start of 2009. The country’s investment pipeline of resource projects is about A$500 billion ($496 billion).
The mining boom is lifting gross domestic product. Australia’s annual growth in the January-March period was the fastest since the third quarter of 2007, a government report showed June 6. Growth averaged over the past two quarters was the fastest among countries with Group of 10 currencies tracked by Bloomberg.
The nation’s employment gains from January through May were the most in five years, and the unemployment rate of 5.1 percent in May is less than half the 11 percent level of joblessness in the euro area.
Still, consumer confidence in May was near the lowest level this year amid concern about the global economy stemming from Europe’s fiscal crisis, according to a Westpac Banking Corp. (WBC) and Melbourne Institute survey.
The central bank chief on June 5 cited “precautionary behavior” by consumers and businesses in explaining his fourth interest-rate reduction since Nov. 1.
Australia’s central bank cut interest rates by 50 basis points late last year and a further 75 points in the past two meetings. At 3.5 percent, the overnight cash rate target is still the highest among major developed economies.
Reserve Bank of Australia Governor Glenn Stevens, in a speech June 8, said the nature of public discussion about the economy “is unrelentingly gloomy.” Even before recent events in Europe, “we were firmly determined to see out glass as half empty,” he said, adding that his view is “Australia’s glass is at least half full.”
Stevens is scheduled to deliver remarks at Gillard’s forum June 13. An attendees list distributed by her office shows dozens of executives from government, labor unions, trade groups and private industry, including RBA board member John Edwards and the chief executive officers of companies including Westpac and Santos Ltd. (STO)
Government ministers have blamed political opponents for perpetuating pessimism.
“We do have an opposition that is determined to talk the economy down,” Trade Minister Craig Emerson said on Sky News June 9. “The trash talking is having a negative effect.”
Opposition leader Tony Abbott says his assessment of the economy has been realistic. Gillard’s policies such as introducing carbon pricing and a tax on mining profits are bad for the economy, he told Channel 10 yesterday.
“Obviously the Reserve Bank is not all that optimistic,” he said. “If it were, it wouldn’t be cutting rates.”
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