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A year in retrospect, a decade in prospect

A year in retrospect, a decade in prospect. Dr Martin Parkinson PSM Secretary to the Treasury 13 December 2011. MYEFO 2010-11.

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A year in retrospect, a decade in prospect

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  1. A year in retrospect, a decade in prospect Dr Martin Parkinson PSM Secretary to the Treasury13 December 2011

  2. MYEFO 2010-11 The Australian economy is in a strong position … real GDP is now growing at around its trend rate … The global economy has recovered from recession faster than expected, but at different speeds across regions … Financial market conditions have improved since the sharp increase in market volatility and stress experienced in mid-2010 when the European sovereign debt crisis reached its peak. Source: Part 1, 2010-11 Mid-Year Economic and Fiscal Outlook.

  3. MYEFO 2011-12 International growth prospects have weakened markedly since Budget and the risks to global stability from the European sovereign debt crisis have intensified … The deterioration in global conditions has contributed to a weaker near-term outlook for the Australian economy than at Budget, with forecast gross domestic product (GDP) and employment growth both revised lower. Conditions are also expected to remain uneven, with the weaker global economy, the high Australian dollar and cautious household spending behaviour creating significant challenges for some sectors. Source: Part 1, 2011-12 Mid-Year Economic and Fiscal Outlook.

  4. Chart 1:Euro area sovereign debt spreads(10-year sovereign spreads to German bunds) Note: The data series for 10-year Irish government bonds was discontinued by Thomson Reuters on 23 November 2011, with Thomson Reuters stating that there are no eligible 10-year government bonds that can be used to underlie the 10-year point on the Irish benchmark curve.Source: Thomson Reuters.

  5. Chart 2:Greek GDP and fiscal adjustment GDP growth over 2011 and 2012 Consolidation measures 2010-2012 Source: European Commission, Reserve Bank of Australia and Treasury.

  6. Chart 3: US recessions Source: US Bureau of Economic Analysis and Thomson Reuters.

  7. Chart 4: US labour market Source: US Bureau of Labor Statistics and Thomson Reuters.

  8. Chart 5: US house prices Source: S&P Case – Shiller and Thomson Reuters.

  9. Chart 6: Tax receipt estimates Source: Treasury

  10. Chart 7: Government spending and revenue Source: Treasury

  11. Chart 8: Regional distribution of unemployment Share of Regions Share of Regions 0.25 0.25 Sep - 08 0.20 0.20 Sep - 11 0.15 0.15 0.10 0.10 Sep - 02 Sep - 98 Dispersion 0.05 0.05 Unemployment rate (per cent) 0.00 0.00 Average 0 5 10 15 20 25 30 Note: Statistical Local Areas (SLAs) are standard small geographic regions in Australia. There are around 1,400 SLAs under the 2006 classifications. As the size of the labour force for SLAs varies from less than 100 to around 100,000, figures in the chart use employment outcomes weighted by labour force size. Regional distributions are smoothed using Gaussian kernel density estimation. For presentational clarity, distributions are over-smoothed with windows of 1, 1, ½ and 3/4 selected for Sep-1998, Sep-2002, Sep-2008 and Sep-2011.Source: DEEWR Small Area Labour Market database and Treasury.

  12. Chart 9: Unemployment across the economy 4 Dispersion Sep - 98 Sep - 03 (start of mining boom) 3 Jun - 11 Mar - 08 Average unemployment rate 2 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 Note: Each point on the scatter plot represents the weighted average and weighted standard deviation of regional unemployment for a particular quarter between Sep-1998 and Jun-2011. The weighted average unemployment rates for all SLAs differ slightly from those estimated in ABS 6202.0.Source: DEEWR Small Area Labour Market database and Treasury.

  13. Chart 10: Projections of the global middle class by region Source: Kharas, H and Gertz G, 2010, ‘The New Global Middle Class: A Cross-Over from West to East’ in C Li (ed), China’s Emerging Middle Class: Beyond Economic Transformation, Washington, DC, Brookings Institution Press.

  14. A year in retrospect, a decade in prospect Dr Martin Parkinson PSM Secretary to the Treasury13 December 2011

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