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OECD economic outlook



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TREASURER

EMBARGO

STATEMENT BY THE TREASURER, THE HON JOHN HOWARD, MR

NO. 127

OECD ECONOMIC OUTLOOK

The OECD Economic Outlook released today points to very stong

growth in activity for Australia. In both 1981 and 1982

Australia's rate of economic growth is expected, to exceed that

of any other OECD country. . ·

The Outlook, compiled on the assumption that existing policies

will be maintained, forecasts growth in real GDP for Australia

of 5ir per cent in calendar 1981, compared with 1 per cent for

the OECD area as a whole. .

Forecast growth in GDP for 1982 is per cent, which compares

with 2 per cent for the total OECD area.

The strengthening in the Australian economy is expected by the

OECD to be broadly based. Private investment expenditure

associated with the development of resource based industries

is seen as a particular source of strength. Private consumption

growth is also expected to be buoyant.

The OECD forecasts a rise in consumer prices of 9τ per cent

for 1981, below the OECD average of 10 per cent. Reflecting

expectations on·".wage, pressures in Australia, the OECD has forecast

that in 1982 consumer prices will rise faster in Australia than

the OECD average. "

2

However, it should, be noted that ,,heir forecasts were compiled

on the basis of information aV; '.able to 2 June 1981 and on a *

"no-policy change" basis. They do not, therefore, take account

of the measures taken in recent weeks by the Government aimed at

combatting excessive growth in the money supply and an acceleration

in inflation.; in particular I refer to restraints on Loan Council

borrowing programs and higher yields on Commonwealth Government

securities.

The OECD assessment is nonetheless a timely reminder that the

primary objective of policy must continue to be to direct policies

towards containing inflation to ensure that growth in economic

activity can be sustained. -

CANBERRA. ACT 9 July 1981