Fed: Modest recovery dependent on stimulus package: Swan

AAP General News (Australia)
08-07-2009
Fed: Modest recovery dependent on stimulus package: Swan

(Eds: adds further comment from Mr Swan)



BRISBANE, Aug 7 AAP - Treasurer Wayne Swan says the Reserve Bank of Australia's forecast
of a modest recovery is based on the full implementation of the government's stimulus
package.

In its monetary policy statement released on Friday, the central bank forecast gross
domestic product (GDP) to rise by 0.5 per cent over the year before lifting to one per
cent in the year to June 2010.

In its last statement, the RBA forecasted GDP to contract by one per cent in calendar
2009 and grow by half a per cent in the year ending June 2010.

Mr Swan said the improved outlook was dependent on the government carrying out its
stimulus package in full.

"The one thing we can see here in the Reserve Bank forecasts is that they are predicated
on a modest recovery and economic stimulus being fully implemented," he told reporters
in Brisbane.

Australia would still see higher unemployment over time, lower business investment
and less income from commodities, he said.

But he said the government was encouraged by the positive signs.

"Australia is the strongest growing major advanced economy in the world with the second
lowest unemployment, and the lowest debt and deficit," he said.

"And part of that story has been the timely and strong action from both the federal
government and the Reserve Bank in terms of the implementation of fiscal policy and monetary
policy.

"We acted early and we acted in a powerful way and the consequence of that is that
many Australians remain in work and many more breadwinners get up in the morning and go
to work."

He said reducing the stimulus package would "pull the rug out from underneath economic recovery".

Mr Swan said the RBA had pointed to tentative positive signs in the global economy
and that the RBA saw no risk associated with Australia's inflationary outlook.

AAP jmm/pjo/srp/de

KEYWORD: RBA SWAN UPDATE

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