A new report shows the Australian economy is expected to grow by 3.75% for 2004, making it one of the best performers of the OECD countries.
The
2003 Economic Survey of Australia released by the OECD shows the federal government's "dogged pursuit" of structural reforms have made the economy resilient to shocks.
"Incomes growth has remained brisk, employment is expanding, inflation is under control, and public finances are healthy," the report says.
"All the indications are that the continuing effects of previous reforms will continue to help the economy to combat shocks in the immediate future.
"In order to meet the longer-term objective of raising living standards towards the highest in the OECD, further reforms to labour, product and financial markets and to social policies will be needed, that will encourage more people to join the labour force, remain in it, and steadily raise their productivity."
The report also says a delayed recovery in the global economy will weaken the projected revival of Australian exports and uncertain business conditions in other countries have the potential to sap local confidence.
"A large increase in investment underpins Australia's short-term growth outlook and, in the past, this component of demand has been particularly sensitive to global economic conditions and the level of uncertainty surrounding the outlook," the report says.
It says the main domestic impediments to growth are the drought and if housing prices were to drop.
"It is not yet clear if the house price boom is a bubble that will burst, with negative impact on household financial positions and spending, or an adaptation to an era of strong real income growth and low interest rates," it says.
"The longer it continues, the greater the likelihood that some of the run-up in prices will eventually be reversed."
The report is available
here.