The Australian Economy Continues To Grow

Great news on the Economy

The latest economic forecasts by the Organisation for Economic Co-operation and Development (OECD) show Australia will significantly outperform the 34-member bloc this year and next.

In its latest economic outlook released in Paris on Tuesday, the OECD forecast Australian growth of 3.1 per cent in 2012 and 3.7 per cent in 2013, after a 2.2 per cent expansion in 2011.

"Australia's economic fundamentals remain strong, with our economy expected to grow more strongly than every single major advanced economy over the next two years," Mr Swan said in statement.

By contrast, the OECD expects a "muted and fragile" recovery in many other advanced economies, largely due to the lingering effects of past global turmoil and very challenging economic conditions facing Europe, the treasurer said.

OECD deputy secretary-general Pier Carlo Padoan warned in the report that the crisis in the euro area had become "more serious" recently and remained the most important source of risk to the global economy.

Against this backdrop, the OECD expects growth across OECD economies to remain at 1.6 per cent in 2012 before picking up to 2.2 per cent in 2013.

But Mr Swan also noted that among Australia's key trading partners, the OECD expects China's economy will grow by 8.2 per cent in 2012 and by 9.3 per cent in 2013.

Mr Swan welcomed the OECD's backing for this month's federal budget.

The Paris-based institution said the restoration of "fiscal leeway" in the 2012/13 federal budget was timely and approved of the Labor government's measures to reach an "ambitious" albeit "slight" surplus, after a deficit in the current financial year.

"The 2012/13 budget ensures that the Australian economy remains amongst the strongest in the developed world, by delivering four years of surpluses to provide a buffer in uncertain global times and give the Reserve Bank room to cut interest rates further should it decide to do so," Mr Swan said