In its latest Economic Outlook Report, the OECD has upgraded Australia’s economic growth outlook for 2020 while noting that “the COVID-19 pandemic continues to exert a substantial toll on economies and societies”.
According to the OECD, global GDP will contract by 4.2 per cent in 2020, before picking up by 4 ¼ per cent in 2021. The OECD says there is “now hope for a brighter future” with vaccines in sight however “the recovery will be uneven across countries, potentially leading to lasting changes in the world economy”.
The OECD has upgraded its outlook for the Australian economy by 0.3 percentage points following the Federal Budget released on 6 October. The OECD now expects Australia’s economy to contract by 3.8 per cent in 2020 (previously 4.1 per cent). This compares favourably to an average fall of 5.5 per cent across all advanced economies.
These figures are despite Victoria’s “strict state-wide” lockdown measures which the OECD recognised led to an “interstate divergence in consumer sentiment and labour market outcomes”.
The OECD also emphasised the Morrison Government’s economic response to the COVID-19 pandemic, pointing to JobKeeper as having “covered nearly one million employers and one-third of all employment, containing the rise in the measured unemployment rate so far”.
This finding was recently confirmed by research from the Reserve Bank of Australia (RBA) which found that the temporary payment helped to reduce “total employment losses by at least 700,000”.
In addition to the effectiveness of JobKeeper, the OECD notes the importance of the Government’s Economic Recovery Plan, in particular personal income tax cuts, the JobMaker Hiring Credit and planned insolvency reforms which it describes as “key”.
These changes are the most significant to Australia’s insolvency framework in 30 years, drawing on features of the Chapter 11 bankruptcy model in the United States, ultimately keeping businesses in business and Australians in jobs.
Our Economic Recovery Plan outlined in the 2020-21 Budget is working to help to create more jobs, boost our economic recovery and secure Australia’s future.