Fed: Unemployment will rise higher than the forecast 7pct: Swan
01 Apr 2009 11:43 PM
CANBERRA, April 1 AAP - Australia's unemployment rate will climb higher than the previous forecast of seven per cent, Treasurer Wayne Swan says.
The OECD tipped this week unemployment will reach an average of 10 per cent across the developed world in 2009.
Growth in developed countries is projected to shrink by 4.3 per cent over the same time, a contraction which Mr Swan says has significant implications for Australia.
"Certainly it does mean that growth will be slower in Australia than was forecast back in February," he told ABC Television.
"Certainly unemployment will be higher than is currently forecast, but we do update our forecasts in the (May) budget."
The treasurer played down the implications of fresh retail sales figures, released on Wednesday, which show retail spending suffered its biggest monthly slump in February since the introduction of the GST in 2000.
Sales tumbled two per cent in February from record levels in January.
The treasurer denied the dismal retail figures showed how quickly the effects of the Rudd government's stimulus packages are exhausted.
"Retail sales are still above the level of November and when you look at what is happening in retail sales around the world, and indeed when you look at the latest forecasts from the OECD and the World Bank, I think you can see that Australia's stimulus package has indeed been working and it has been indeed supporting jobs and supporting demand in the economy," he said.
"Retail sales and consumption in Australia is holding up in a way in which it is not holding up in just about any other developed country in the world."
Mr Swan is in London attending the G20 summit of the world's largest economies, where there will be a debate about the role of economic stimulus in dealing with the global financial crisis.
"I think everybody at the table recognises that over time, that some discipline has to be restored but that can only happen, that can only happen when growth is restored and growth returns to trend," he said.
"In the meantime, there is a very legitimate debate about the size of stimulus that's required and the period over which that stimulus should last."
