OECD calls for vigilance amid Aussie housing slump

The Organisation for Economic Co-operation and Development (OECD) has released its biannual Economic Outlook, which has described Australia’s economic growth as “robust” and “projected to continue at a robust pace”.

The OECD has also upgraded its projection of Australia’s 2018 real GDP growth by 0.2 of a percentage point to 3.1 per cent and noted that the unemployment rate has reached its “lowest level in five years” and that labour participation has “risen to levels last seen during the mining investment boom”.

The OECD also found that rising employment is “boosting incomes and consumption” and predicted that wage growth would “rise gradually”, while the unemployment rate “edges lower”.

The OECD report also noted that the debt-to-GDP ratio “remains relatively low”, providing “sufficient room to support activity in the event of an unexpected downturn”.

However, the OECD has warned that “unexpectedly large corrections in house prices could reduce household wealth and consumption, and impact the construction sector”, adding that “given the potential financial and macroeconomic risks [from the housing market], supervisors should remain vigilant”.

Commenting on the OECD report, Treasurer Josh Frydenberg said: “The OECD’s assessment builds on recent findings from global credit rating agencies, Standard & Poor’s and Fitch, which reaffirmed Australia’s AAA credit rating, and the International Monetary Fund, which recognised our budget management and strong economic growth.

“The Coalition government’s economic plan is delivering a stronger economy helping us to deliver the essential services Australians rely on. On top of this, unemployment is down to 5 per cent and there are now more than one million additional people in work than when we came into office five years ago.”

The OECD also predicted that global growth is projected to have peaked at 3.7 per cent and warned that “the global economy is navigating rough seas” and “policymakers will have to steer their economies carefully”.

Mr Frydenberg concluded: “Australia cannot risk a return to Labor’s high tax and spend approach.”

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