Australian Economy

OECD revises Australian GDP forecast marginally lower, expects inflation to stay at 5pc this year

One of the world’s leading economic bodies has pushed lower its expectations for the Australian economy over the next two years, and pushed up its forecasts for national inflation.

Forecasts released late on Friday by the Organisation for Economic Co-operation and Development show the world economy is on a fragile path to recovery, with persistent downside risks.

The agency expects Australia’s GDP to grow 1.8 per cent this year and 1.5 per cent next year — both revised down 0.1 percentage points from November forecasts.

Inflation is expected to be at 5 per cent by the end of the year — 0.2 percentage points higher than the RBA’s expectation of 4.8 per cent — but almost halve to 2.8 per cent by the end of next year.

In line with broad economic and political assessments, the OECD expects the Australian economy to substantially benefit from China’s expected rebound, which it says should offset the impact of tighter financial conditions.

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