FED: Economists agree forecasts not too optimistic: PMPARLY 017
13 May 2009 3:18 PM
Subject: FED: Economists agree forecasts not too optimistic: PM FED: Economists agree forecasts not too optimistic: PM
CANBERRA, May 13 AAP - Australia's leading economists don't believe Treasury's growth forecasts are too optimistic, despite the fact they're more positive than an International Monetary Fund (IMF) outlook, the prime minister says.
Opposition Leader Malcolm Turnbull asked Kevin Rudd to explain why a recent IMF outlook showed the Australian economy growing at 1.1 per cent in 2010, while Treasury sees growth a year later at 4.5 per cent.
"(That's) more than four times the IMF's projection," Mr Turnbull told parliament.
In April, the IMF actually forecast Australian growth would contract by 1.4 per cent in 2009 before picking up and growing by a slim 0.6 per cent in 2010.
The prime minister was quick to point out that senior economists at CommSec, ICAC Australia, UBS and Westpac had all described Treasury's forecasts as "being on the pessimistic or beary side".
"Obviously there's going to be debate among forecasters," Mr Rudd told parliament.
"But the government believes the independent advice of the Treasury and I would say to those opposite they should respect the independence and the integrity of the commonwealth Treasury.
Treasury was forecasting three years of below trend growth in 2008/09, 2009/10 and 2010/11, Mr Rudd said, insisting the outlook was "conservative".
"Growth is forecast to remain below trend for three years, that is longer than during the downturns of the 1980s and the 1990s.
"The two years above trend are the two years at the outer end of the spectrum, that is 2011/12 and 2012/13."
While forecasting a recession in the 2009/10 financial year with a growth rate contraction of 0.5 per cent, Treasury sees the economy steaming along at 4.5 per cent by 2011/12.
This sharp turnaround in economic fortunes is part of government's strategy to return the budget to surplus by 2015/16 after recording a record $57.6 billion deficit in 2009/10.
FED: Economists agree forecasts not too optimistic: PM