Strong Economy Growth Assured If Virus Curbed: Treasurer

Strong Economy Growth Assured If Virus Curbed: Treasurer
Botany port in Sydney, Australia, April 16, 2020. (SAEED KHAN/AFP via Getty Images)

Federal treasurer Josh Frydenberg is confident that as long as the COVID-19 is kept at bay, the economy will continue to grow.

The national accounts released on Dec. 2 showed the economy grew by 3.3 percent in the September quarter, a strong recovery from the record seven percent contraction in the June quarter.

While the economy is now technically out of recession, the annual growth rate is still at minus 3.8 percent.

Even so, Frydenberg said Australia is outperforming other developed economies like Japan, Canada, New Zealand, France, the UK and Germany.

"Not just on the economic front but also on the health front," Frydenberg told ABC radio on Thursday.

"I have no doubt that as long as the virus is controlled that the economy will continue to grow."

However, the Organisation for Economic Cooperation and Development (OECD) this week urged Australia not to withdraw its fiscal and monetary policy support until the economic recovery is "well entrenched".

Frydenberg insists the JobKeeper wage subsidy will end as planned, but said other supports, like the extension of HomeBuilder and assistance for the travel agents, have been announced in the past few days.

"We will continue to take the measures necessary to support the economy, but JobKeeper as a nationwide wage subsidy will come to an end at the end of March," he said.

But shadow treasurer Jim Chalmers said programs like JobKeeper need to be responsive to what is actually happening in the economy.

"What we would like the government to do is to be more flexible than their language suggests, so if it becomes clear that the labour market is weak for a longer period, that support like JobKeeper is responsive to that," Chalmers told ABC radio.

Meanwhile, there were more positive signs in the construction sector.

The Australian Industry Group/Housing Industry Association performance of construction index rose by a further 2.6 points to 55.3 in November.

This was second consecutive month of positive conditions and the strongest monthly result since April 2018.

"The Australian construction sector grew more strongly in November with both activity and employment decisively stronger in the month," Ai Group's head of policy Peter Burn said.

"House building was the cornerstone of the lift in performance with support from commercial and engineering construction."

Other figures on Thursday are expected to show a re-emergence of exports growth in October.

Despite the strong national quarterly growth figure in the September quarter, exports detracted 1.9 percentage points from the result, the largest subtraction in 40 years.

Economists expect the trade balance for October will show a $5.8 billion surplus, up from $5.6 billion in September.

Exports are expected to rise by 3.5 percent in the month.

Economists at Westpac said the world economy has made gains over the second half of the year, boosting demand for Australian exports.