The OECD has given the Australian economy and the government’s stewardship of it a ringing endorsement while urging a series of unpalatable reform to further strengthen it in its latest economic survey, released this morning. It has also urged the government to abandon its commitment to surplus in the event that growth weakens.
The current outlook for the economy is positive, the OECD concludes, “even though there are mainly negative risks stemming from the external environment, to which Australia is however less vulnerable than many other OECD countries”. Our “current monetary and fiscal policy mix is appropriate to sustain recovery, and Australia is in a good position to respond to risks”. However, “in case of a sharper-than-expected cyclical weakening, the central bank should loosen further and the fiscal automatic stabilisers should be allowed to work, even if this postpones the return to budgetary surplus”.