Australia’s economy will likely perform under capacity and unemployment will rise, despite the country’s resilience in the face of the global downturn, Treasurer Wayne Swan said yesterday.
Swan said the government’s A$70 billion (US$63.2 billion) emergency stimulus package had helped keep Australia out of a recession — the only major Western country to do so — but that uncertainties remained.
“We still expect the economy will operate below capacity for a while yet and for the unemployment rate to continue to rise,” he told economists at a lunch in Sydney.
“The full effects of the fall in Australia’s terms of trade are also still being felt and this will continue to weigh on domestic incomes. Private business investment and company profitability are still expected to decline,” he said.
Australia posted growth of 0.6 percent in the three months to June — the best in the developed world — while the country’s unemployment rate fell unexpectedly for the first time in five months last month to 5.7 percent.
But Swan, who did not put a figure on future unemployment, said without the government’s fiscal stimulus the economy would have contracted by 1.3 percent over the year to June.
The treasurer said one year after the global financial crisis rattled markets around the world, a sustained global recovery was “no sure thing.”
“Substantial uncertainties remain and Australians’ jobs are still at risk as a consequence,” he said.
And yet, “it is possible the economy could continue to surprise on the upside,” he said.
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