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Australia has weathered the global economic crisis relatively well and enjoyed robust growth in per capita income, fostered by favourable terms of trade and high employment rates. However, productivity gains have slowed in recent years and the level remains below that of leading OECD countries.
Australia’s productivity growth has decelerated markedly around the turn of the century. Part of the decline is probably temporary, but raising multifactor productivity is key to ensure that living standards continue to grow strongly, especially if the currently strong terms of trade weaken over time.
The priority for Australia is to adapt to fast-developing Asia which opens vast new opportunities but also imposes strains. This adjustment will require flexible labour and product markets and lifting productivity growth.
The Australian economy is robust and faces a solid short-term outlook, but it must continue adapting to ensure that its privileged place in the Asia-Pacific region contributes to long-term sustainable growth, according to the OECD’s latest Economic Survey of Australia.
Summary of Economic Surveys: Australia
Country Notes from OECD Economic Policy Reforms: Going for growth 2011 presenting OECD recommendations for structural reform priorities for individual countries.
Australia faces the mutually reinforced challenges of boosting labour supply and promoting social inclusion. Labour underutilisation is especially prevalent among groups such as lone parents, people with disability, and Indigenous Australians.
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Overview - Australia Economic Review 2010
Australia’s key risks are medium-term--supply bottlenecks, the rising current account, and uncertainty about commodity prices. Policies should guard against inflation and fiscal pro-cyclicality while preserving a flexible economy and ensuring a fair distribution and use of the prosperity benefit
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This note is taken from Chapter 3 of Economic Policy Reforms: Going for Growth 2010.