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  • e Organisation for Economic Cooperation and Development, or OECD, shows the country on track for economic growth (AAP)
Leading economic agency paints a bright picture of Australia’s economy but slams slow progress on Indigenous socio-economic outcomes.
Tara Cosoleto, Ricardo Goncalves

11 Dec 2018 - 4:13 PM  UPDATED 11 Dec 2018 - 4:13 PM

In its latest report released this Monday the organisation for Economic Cooperation and Development (OECD), the world's leading economic agency, has painted a positive picture of Australia's economy saying it is on track to grow 3 per cent in the next year.

The OECD reports that despite a relatively healthy economy some groups of people are vulnerable and face low workforce-participation rates and a high risk of poverty.

The OECD says the substantial gaps between Indigenous Australians and the rest of the population are narrowing too slowly.

Indigenous figure and former Labor Party president Warren Mundine agrees with the assessment.

"You just see it every year at the Closing the Gap presentation to parliament by the prime minister. One of the things that we do have missing from that is that a lot of these things, like health, housing, education and so on, are state matters, Mr Mundine said.

The Indigenous leader also calls on states and territories to take more responsibility. "We need to have the premiers at that prime ministerial presentation so that they are held accountable as well.”          

The Organisation for Economic Cooperation and Development says Australia's housing prices could prove to be a vulnerability next year. While house prices have fallen gradually since late last year, the market is still on track for a soft landing.

Looming threat of hard-landing and global trade tensions

OECD senior economist Phil Hemmings points to global trade tensions and a slight chance of a hard landing of the housing market as the major economic threats facing Australia next year.

“There are uncertainties in the global outlook looking forward, particularly related to trade issues, as we read about. Domestically, there is, of course, the risk, possibly small, of this hard landing in the housing market,” Phil Hemmings says.  

The OECD report also suggests uncertainty around exports to China, and the potential escalation of global trade tensions could also be concerns for Australia's economy.

Although Australia's economy relies heavily on China, China is already introducing measures to offset any hits.    In its latest report, the OECD has also called for interest rates to be gradually lifted as growth continues and inflation slowly rises.         

The Reserve Bank of Australia has kept the official cash rate at its record low of 1.5 per cent since August 2016 and has signalled that is not likely to change soon.           

The OECD has also recommended the federal government continue to be fiscally conservative and bring the budget back to surplus, despite pressure to lift public spending.

The report has also taken aim at Australia's climate-change policy, saying it still lacks clarity and stability.

The OECD says frequent changes in policy have created uncertainty for companies, which are now discouraged about investing in Australia's energy sector.

Economists have consistently called Australia’s major parties to be clearer and more consistent with energy policy.