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September 1, 2009

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Australia may revise gloom on jobless

AUSTRALIA'S forecast unemployment peak of 8.5 percent in 2011 could be too pessimistic as the economy avoids recession, Treasurer Wayne Swan said yesterday.

The forecast waas part of the government's economic blueprint announced in May to run budget deficits totaling A$188 billion (US$158 billion) over the next four years as it ramps up infrastructure spending designed to stimulate the economy.

But economic indicators suggest the global economic downturn is not slowing the Australian economy to the extent that Australia's treasury had initially predicted.

Australia's economy unexpectedly eked out growth of 0.4 percent in the first three months of 2009, one of the few major advanced economies to avoid a recession amid the global slump. The sluggish economy had shrunk by 0.5 percent in the last quarter of 2008 and had been expected to further weaken.

Australia's current unemployment rate is 5.8 percent. Swan said the peak could be revised down when the Treasury Department releases its updated economic forecasts late in 2009.

"It may well be the case unemployment is somewhat lower than we'd forecast in the budget, and that would be a terrific thing," Swan told Australian Broadcasting Corp.

Swan said the government would maintain its program of stimulus spending despite analysts warning that it could lead to interest rate rises. The central bank has slashed its benchmark interest rate from a peak of 7.25 percent in September to 3 percent.


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