Bad news galore for Australian economy

Just two weeks after the release of Federal Budget, outlook is not looking rosy for Australia.

According to the IMD World Competitiveness Yearbook, Australia has fallen in world competitiveness rankings, taking a hit to its economic performance.

The Yearbook which ranks 61 countries has put Australia at no.28 – a drop of one  place year on year and, highlighting concerns about our competitiveness as a smart economy.

“The results are drawn from rankings for four key areas - economic performance, government efficiency, business efficiency and infrastructure and Australia has slipped significantly in all these areas over the last five years,” CEDA Chief Executive Stephen Martin said.

Worsening domestic economic conditions, rising unemployment and lower international investment have been named as the biggest contributors to the drop.

Also read: Bizarre budget details you didn't hear about
Also read: Individuals to do the tax lifting

Martin said while Australia only slipped one place compared to last year and five places in five years on infrastructure, it was concerning that the two areas where we slipped the most in this category were in technological infrastructure and scientific infrastructure.

Another alarming slip is in productivity and efficiency where Australia has dropped 10 places in five years.

Australia’s government efficiency ranking also dropped five places this year compared to 2014, a drop of seven places in five years. Our ranking in public finance is the biggest contributor to this drop, slipping from 13 last year to 28 this year.

Winners and losers of Joe Hockey's 2015 budget



'From bleak to recessionary'

The news doesn’t get any better.

Fairfax media has reported that a number of firms (both mining and non-mining) are planning to slash investment in the year ahead, cutting their total spending by 21 per cent.

The report quotes a Bureau of Statistics survey of chief financial officers that appears to be at odds with the budget forecast of a lift in non-mining investment.

The survey showed that mining firms expect to cut investment 34 per cent, manufacturing firms 24 per cent, and other firms 6.1 per cent.

"The rotation away from mining investment that seemed to be progressing over the past year is no longer advancing," JP Morgan economist Stephen Walters.

Opinion: Joe Hockey has delieverd a 'Viagra' budget

UBS economist George Tharenou told clients the outlook had switched "from bleak to recessionary".
"The capital expenditure cliff has arrived early," he said. "This data is so bad it would worry the Reserve Bank and raises the risk they will cut rates again ahead."
Joe Hockey’s budget this year forecast economic growth of 2.75 per cent in the year ahead and 3.25 per cent in 2016-17.