Australia’s Swan Says Jobless Will Continue to Rise

Oct. 4 (Bloomberg) -- Australia’s unemployment rate is expected to keep rising as the global recession dampens growth in the local economy, Treasurer Wayne Swan said.

The nation’s jobless rate will peak at 7 percent in 2010, lower than the 9.4 percent rate forecast for major advanced economies, Swan said today in his weekly economic note sent by e-mail, citing the International Monetary Fund.

That’s “still too many jobs lost as unemployment continues to rise,” Swan said. “Even with the IMF last week downgrading its forecast for peak unemployment in Australia, the unemployment rate is expected to continue to rise as the impacts of the global recession continue to wash though our economy.”

Australian employment fell in August by almost twice as much as economists estimated, the statistics bureau said on Sept. 10, while the unemployment rate was at 5.8 percent. The nation’s jobless rate would be as much as 1.9 percentage points higher in 2010 without government stimulus to consumers and infrastructure spending, the Organization for Economic Cooperation and Development said last month.

“The federal government still has its foot on the accelerator, but will the Reserve Bank of Australia hit the brakes at the same time?” Robert Olivier, from recruitment company the Olivier Group said in an e-mailed release today.

Australian labor force figures will be released this week and its central bank will make a decision on interest rates. The Reserve Bank of Australia will keep its overnight cash rate target unchanged at 3 percent on Oct. 6, according to 19 of 20 economists surveyed by Bloomberg News.

‘Significant Fall’

“The significant fall in the number of hours worked in Australia shows the sacrifice being made by many thousands of Australians to save those jobs,” Swan said in the note. “While Australia has outperformed every advanced economy throughout this global recession, now is not the time for victory laps or for ripping out the stimulus.”

Australia’s economy will grow 0.7 percent this year and 2 percent in 2010, the IMF said on Oct. 1, compared with its April forecast for a 1.4 percent contraction and 0.6 percent expansion respectively. The global economy is forecast to contract by 1.1 percent in 2009, versus a previous estimate of 1.4 percent, before expanding at 3.1 percent in 2010, up from 2.5 percent forecast previously, Swan said in his note, citing the IMF.

“Despite these improved forecasts the recovery in the global economy is far from assured,” Swan said.