On page 4 of today’s Australian Financial Review there is a summary of today’s OECD (the Organisation for Economic Cooperation and Development) report on their views relating to Australia’s economy. Then there was some more coverage of the OECD report on “The Business” on ABC News 24.
On the upside the OECD sees Australia growing economically at about 3.1 percent over 2012 and this may improve to 3.7 percent in the 2013. While this is down on their previous forecasts where they predicted 4 percent growth in 2012 it is still better than most other ‘western’ countries.
The OECD also see retail business picking up in 2013 although it may dip in the second half of 2012. This sort of aligns with Myer’s recent quarterly report (also covered on ABC News 24) where, based in sales so far this year, they are forecasting a 15 percent drop in income for 2012.
On the downside the OECD are forecasting commodity prices falling further in the remainder of 2012, but they should level out in the first half of 2013 and start to recover in the second half of 2013. However this outcome will depend heavily on what happens in Europe (which does not seem to be going so well at the moment) and a continuing recovery in the American manufacturing industry.
Also on the downside the OECD sees the Australian domestic property market as still being over-valued compared to other similar countries; especially for a country where habitable real estate is abundant. They are forecasting that domestic property still has some correcting to do. This in combination with the negative effects of the mining boom are likely to cause some ‘hurt’ (their word, not mine) to the property market with further downward adjustments likely over the next 18 months.
They also forecast that the unemployment rate will increase slightly over the next 12 months through the second half of 2012 and the first half of 2012. But with almost daily news of one company or another putting off workers or closing down you would not have to be very sharp to make this particular forecast—almost anyone could make this prediction.
So, all in all, based on the OECD’s view of the world and Australia, it would seem that the next 18 months are going to much like the last 18 months with possibly a relatively small overall upturn.
I wonder if they factored the Australian stock market’s incredible 11 percent tumble over the last two weeks into their forecasting?