Australia: Strong GDP growth in first quarter of 2012 says latest updater report

According to the report 'Country Forecast Australia July 2012 Updater' the Australian government will try to focus on the implementation of policies passed in 2011, such as taxes on carbon emissions and on profits in the energy sector. Real GDP is set to grow by 3.2% a year on average in 2012-16. The budget will remain in deficit in fiscal year 2011/12 (July-June), but the government is expected to achieve its goal of eliminating the fiscal shortfall in 2012/13. The annual rate of inflation is expected to slow in 2012, to 2.7%, as global prices for food and fuel moderate. It will then average 2.7% in 2013-16.

The prime minister, Julia Gillard, will remain a beleaguered figure unless she is able to demonstrate more effective leadership of the government.

The government needs to weigh up the political benefits of supporting industries struggling in a difficult external environment against the boost to productivity that could be achieved by channelling resources to sectors, such as mining, in which Australia has a comparative advantage

The Economist Intelligence Unit has revised up its forecast of GDP growth in 2012 to 3.2%, from 3% previously, following strong growth in the first quarter of the year. View the report.

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