Car dealers confidence cooled by OECD economy forecast
Only days after renewed confidence in Australian new car sales, the OECD have cast doubt over the Treasury’s budget forecasts.
The Australian newspaper reports that the Paris based group are the second such institution to cast doubt over the budget, suggesting that a rapid recovery would be unlikely to be realised.
Slower growth for the economy
The OECD forecast that the Australian economy will grow by only 3.2% in the medium term – almost one-percentage point lower than the figure forecasted by the Treasury.
This will shake new car dealer confidence only days after the Australian Bureau of Statistics reported that new car sales increased by 5.4% to 75,472 in May. The increase in the number of cars is directly attributed to the 30% tax break, which the Australian Treasury put in place until the end of June.
Although the OECD was critical of the Treasury’s forecasts, the group also announced that the Australian economy was in a strong position. Although they expect the ecomony to shrink by only 0.4%, they predict the Australian economy to pick up and grow by 1.2%.
The group also expects unemployment to rise to 7.7%, against the budget’s forecast of 8.5%.
The OECD also pointed out that many other economies, such as Japan, do not have the capacity for stimulus spending and should the world economy contract again this year, then Australia may expect more discretionary stimulus spending this year.
This is good news for car dealers as another round of Treasury hand-outs would help consumer confidence and stabilise the new car market.
Source: The Australian; OECD Press Conference