ETF From Down Under: Why Australia Has the OECD’s Stamp of Approval

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As a result of Australia’s prudent fiscal policies, the OECD Economic Outlook recently put Australia’s economic growth and employment outlook in the limelight. Burgeoning demand from Asia for resources may help Australia’s ETF weather the current market turbulence.

The Organization Economic Co-operation and Development’s (OECD) report highlighted Australia’s strong economic management in fighting off the global recession and its ability to return the budget to surplus three years ahead of scheduling and halving peak debt, according to eGov Monitor.

The OECD has revised upward Australia’s growth forecasts to grow by 3.2% in 2010 and 3.6% in 2011 – OECD area as a whole is estimated to grow 2.7% in 2010 and 2.8% in 2011. The group projects Australia’s unemployment rate will decrease to 4.8% by the end of 2011, as compared to 8% for the whole of the OECD area.

The OECD also added that “companies in the mining sector should benefit in particular from the dynamism of Asian markets and the significant pick-up in the terms of trade.”

The Australian index of leading economic indicators inched up 0.9% in March to 260.9, or an annualized rate of 8.7%, reports Jacob Greber for BusinessWeek. The coincident index, a measure of the current state of the economy, rose 0.2% to 248.6 points.

Gains in March were bolstered by higher stock prices, real money supply and housing approvals. However, Bill Evans, chief economist at Westpac Banking Corp. in Sydney, cautions that deteriorating economic conditions in April and May could cause “considerable correction to the leading index over the next few months.”

  • iShares MSCI Australia (NYSEARCA:EWA)

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