INTERNATIONAL ECONOMIC DEVELOPMENTS MIKE CALLAGHAN Executive Director (International) Australian Treasury Australia – Japan Economic Outlook Conference 24 November 2011

‘Since we last met, the global recovery continues to advance but downside risks remain.’ G20 Seoul Leaders Declaration – November 2010

‘The global recovery is strengthening but is still uneven and downside risks remain. While most advanced economies are seeing modest growth and persisting high unemployment, emerging economies are experiencing more robust growth, some with signs of overheating.’ G20 Finance Ministers and Central Bank Governors Communique – February 2011

‘The global recovery is broadening and becoming more self-sustained, with increasingly robust private demand growth. But downside risks still remained.’ G20 Finance Ministers and Central Bank Governors Communique – April 2011

‘The global recovery has entered a new and difficult phase. Global growth has weakened, downside risks have heightened, and confidence has waned. Uncertainty over the sustainability of public debt levels in some advanced economies has increased, and the rebalancing in demand from the public to the private sector has not materialized.’ Cannes G20 Leader Summit – 3-4 November 2011

Global growth moderating IMF forecasts by date of publication Source: IMF.

‘our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of [a] downward spiral of uncertainty, financial instability and potential collapse of global demand... we could run the risk of what some commentators are already calling a lost decade.’ IMF Managing Director, Christine Lagarde – 9 November 2011

Growth forecasts lowered Note: Consensus countries make up around 95 per cent of global GDP on a PPP basis, with the remainder estimated using IMF WEO growth rates. Consensus for India is for fiscal years, which commence 1 April. n.a. = Not available. Source: IMF World Economic Outlook April 2011 and September 2011, Consensus Economics.

Recovery since the crisis Source: National statistical agencies, Thomson Reuters and Treasury.

US employment during recessions Source: US Bureau of Labor Statistics, Thomson Reuters and Treasury.

European sovereign yields spreads Source: Thomson Reuters.

‘The widening crisis in the euro area should nevertheless serve as a cautionary tale for the United States and Japan, as well as other countries with high debts and deficits.’ IMF Fiscal Monitor – September 2011