The Morrison government this weekannounced $3.8 billion of infrastructure projects would be pulled forward or given additional funding over the next four years. The decision followed calls from the Reserve Bank of Australia (RBA),which has slicedofficial interest rates to a record low 0.75 per cent,for a lift in public spending plus productivity-enhancing structural reforms.
Buteconomists have warned the new spending will equate to less than 0.1 per cent of gross domestic product (GDP),arguing much more needs to be done to get the economy growing fast enough to bring down the national unemployment rate.
The Organisation for Economic Co-operation and Development (OECD),which noted the global economy was now growing at its slowest rate since the global financial crisis,said it expected Australian GDP to expand by 2.3 per cent this year and next,well short of the federal government's forecast.
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It also expects private consumption,which accounts for about 60 per cent of total economic activity,to barely grow faster than inflation over the next two years.
In March,the OECD was expecting unemployment to start edging down. It has now lifted its forecasts,tipping unemployment to average 5.3 per cent in 2020.
"Economic activity has been weak,"the OECD said about Australia. "Private consumption spending has been sluggish,weighed down by slow wage growth and an increase in taxes paid by households."