Economic growth is projected to firm to about 2¼ per cent in 2020-21. While weaker trading partner growth and a downturn in domestic dwelling investment will weigh on economic conditions, recent household tax cuts and monetary policy easing should provide some support to activity. Subdued output growth and lingering uncertainty will weaken the recent strong labour market conditions.
Raising medium-term growth should focus on improving the business environment and strengthening competition, boosting skills and improving the efficiency of the tax system. Continued challenges in climatechange policy have warranted inclusion in the key priorities.
Australia’s economy and labour market have been resilient, with rising employment and labour-force participation; projections show a continued robust output growth of around 3% in the near future. Living standards are good but socio-economic challenges remain, especially for more vulnerable groups with high risk of poverty. Australia faces economic challenges that, if not handled well, could see an end to its strong track record.