Australia's growth prospects remain sound despite global weakness

Resilience in uncertain times

Adverse economic and financial developments in the world's largest economies continue to constrain world growth. The Australian economy remains resilient, growing faster than most other developed economies.

Economic performance

Over the past couple of years, global economic conditions have weakened and international uncertainty has increased. Recent events, including the war in Iraq and the SARS outbreak, have added pressure to an already weak and fragile global economy.

In a very difficult international environment, the Australian economy has shown remarkable resilience. Our economy has continued to grow solidly, outperforming most other developed economies. Investment has surged, employment has grown strongly and inflation has remained moderate. The OECD describes Australia as one of its best performers.

Even more remarkable is that this growth has occurred while Australia has battled the most extensive drought in Australian meteorological records.

Looking forward, prospects for the Australian economy remain sound, although global weakness continues to cloud the near–term outlook.

Economic growth is forecast to be 3¼ per cent in 2003-04. The unemployment rate is expected to remain steady and inflation is expected to be within the target band.

Despite the positive outlook for the Australian economy we should not be complacent. Substantial downside risks surround the international outlook and, if international conditions deteriorate, the Australian economy will be affected.

But, with strong fundamentals and supportive policy settings, the Australian economy and Government are well–placed to face, and respond to, future challenges.