In its latest Economic Outlook, released on Thursday evening, the Paris-based organisation, led by former finance minister Mathias Cormann, called for measures to ease inflationary pressures, slash Australia’s structural deficit, and bolster anaemic productivity growth.
“Monetary policy should remain restrictive in the short term to tame inflation,” the OECD said, with the report assuming three rate cuts between the September quarter and the end of 2025. According to the OECD forecasts, Australia’s real GDP growth is projected to slow to 1.5 per cent through 2024 before recovering to 2.2 per cent in 2025, as the impact of the RBA’s aggressive run of rate hikes crimps household consumption and business activity.
Urging the government to trim Australia’s structural budget deficit, which has been buoyed by soaring income and company tax collections for the past two years, the OECD called for reforms to Australia’s tax and spend system to help fund the energy transition and the costs of an ageing population. Reforms designed to counter the country’s productivity malaise and position Australia for a period of “sustained economic growth” were also recommended.