In this paper, the IMF's new Global Economy Model (GEM) is used to estimate the contribution of unbalanced growth to the decline in the share of goods production in Australia and New Zealand. The simulation results suggest that faster productivity growth in the tradable goods sector in Australia, New Zealand, and their major trading partners accounts for a significant portion of the relative decline in the importance of goods production. Over the 1995 to 2004 period, unbalanced growth explains more than 80 percent of the decline in goods production in both countries.
Using a production function method, this paper assesses the impact of the global crisis on the potential growth of Australia and New Zealand. The two countries have not been hit hard by the global crisis, but have large net external liabilities. The paper finds that the main negative impact of the global crisis is likely to come through higher costs of capital, offset partly by a higher return to capital from strong demand for commodities by emerging Asia. It estimates medium-term potential growth of about 3 percent for Australia and 2. percent for New Zealand, higher than that of many other advanced economies.
Mr. Geoffrey J Bannister, Mr. Harald Finger, Siddharth Kothari, and Ms. Elena Loukoianova
There is growing recognition that the COVID-19 pandemic may have long-lasting negative effects on the economy . The COVID-19 pandemic has exacted a heavy human toll and triggered the worst global recession since the Great Depression. While a near-term recovery supported by reopening of the economy following lockdowns has set in, this recovery may turn out to be drawn-out and partial given the pandemic’s longer-term economic impact through scarring. 2
Focusing on AustraliaandNewZealand as examples among advanced economies, this paper