Suchergebnisse

This quarterly two‐year forecast from the Access Economics Murphy (AEM) model updates that presented in the corresponding article in the 4th quarter 1991 issue of the Australian Economic Review.As predicted in the previous forecast, the economy entered a slow recovery in the December quarter of 1991. Steady growth averaging close to 1 per cent per quarter is likely during 1992–93 and 1993–94.Unemployment may peak at around 10 3/4 per cent in mid‐1992, before slowly falling to a year‐average level of around 9 per cent in 1993–94.Under the influence of the recent recession, CPI inflation is likely to be around 2 per cent per annum on a year‐on‐year basis for both 1991–92 and 1992–93. With economic recovery, it is forecast to rise to 4.5 per cent per annum in 1993–94.While the recession has helped bring the current account deficit down from near 6 per cent of GDP in 1989–90 to around 3 per cent for 1991–92, it will rise with economic recovery, and is forecast to exceed 5 per cent of GDP by 1993–94, compared with a sustainable level of 3 to 3 1/2 per cent.The economic recovery is not proving to be as strong as forecast in One Nation.However, there is a recovery clearly underway, and any further easing of monetary and fiscal policy risks prejudicing a substantial part of the recent impressive gains on inflation and creates a major medium‐term problem for public finances.

AbstractA slow recovery, commencing in the December quarter of 1997, is expected from the current recession. Overall, gross domestic product (GDP) may increase by 2.8 per cent in the year to the June quarter of 1992, and continue to increase at a similar rate thereafter.This subdued recovery is likely to see the unemployment rate at over 70 per cent to the end of 1992, before moving down slowly to around 8.5 per cent by the mid‐1990s.Consumer price index (CPI) inflation may fall sharply from a peak of 8.0 per cent in 1989‐90 to a trough of under 3 per cent in 1997‐92, due to the recession and movements in oil prices. With a slow recovery, inflation may then increase to 5 per cent per annum in the medium term.The current account deficit has fallen from 6.0 per cent of GDP in 1989‐90 to 4.7 per cent in 1990‐91, despite a fall in the terms of trade of 5 per cent. However, this has been due to the cyclical downturn. With a slow recovery in demand, and rising real labour costs hampering expansion in export and import‐competing industries, the current account deficit may once again reach 6 per cent of GDP by the mid‐1990s, implying steady increases in the foreign debt‐to‐GDP ratio.This forecast assumes monetary policy targets an inflation rate of 5 per cent per annum. Any further easings in monetary policy may undermine the credibility of the inflation objective with the result that the trade weighted index (TWI) exchange rate may drop sharply from 59.

AbstractA slow recovery is expected from the current recession. Since reaching a trough in the September quarter of 1990, real gross domestic product (GDP) has followed a flat path which is likely to continue through to the September quarter of 1991. A slow recovery may then commence in the December quarter of 1991. This is consistent with real GDP growth of ‐0.9 per cent in 1990‐91 followed by 2.4 per cent in 1991‐92 and around 3 per cent per annum to the mid‐ 1990s compared with 'normal' growth of 2.5 per cent per annum.This recovery is likely to see the unemployment rate at over 10 per cent for most of 1991‐92, before moving to around 8 per cent by the mid‐1990s.Inflation may fall sharply from a peak of 8.0 per cent in 1989‐90 to a trough of 3 to 4 per cent in 199 1–92, due to the recession and movements in oil prices. With a slow recovery, inflation may increase to 4 to 5 per cent per annum in the medium term.The current account deficit has fallen from 5.9 per cent of GDP in 1989‐90 to a likely level of 4.1 per cent in 1990‐91, but part of this gain is cyclical rather than structural. Thus the deficit is expected to increase to around 5 per cent during recovery and remain flat to the mid‐ 1990s, implying steady increases in the ratio of foreign debt to GDP.Looser monetary policy would erode part of the forecast sustained reduction in inflation. Looser fiscal policy would lead to a higher current account deficit.

AbstractThis article argues that the recent implementation of monetary policy in Australia has been dominated by the response to a large range of unanticipated shocks. In the process of trying to minimise the adverse effects of such shocks, considerable uncertainty has been created about likely outcomes in the medium term. This makes medium‐term objectives harder to achieve. Taking the reduction of inflation as an example of an appropriate medium‐term objective, simulations are presented using the Murphy model of the Australian economy. The simulations demonstrate that a tightening of monetary policy will reduce inflation more slowly if private agents believe that the tightening is unlikely to be sustained for long. Under uncertainty, monetary policy will have to be tighter and real GDP significantly lower to achieve a given reduction in inflation. A confingency rule of medium complexity is suggested as one way in which appropriate medium‐term objectives might be achieved while allowing some flexibility to react to unexpected outcomes in the short run.