A truly lucky country

REAL estate prices are under threat from the high dollar, along with confidence and jobs, but the Organisation for Economic Cooperation and Development says Australia is set to grow at just about the fastest pace in the developed world for decades to come.

The OECD Economic Outlook, released on Tuesday night in Paris, puts Australia near the top of the tree for economic growth during 2012, behind only South Korea, Mexico and Chile.

While Australia’s economy is set to grow at 3.1 per cent this year, close to the budget forecast, the US should grow at 2.4 per cent, Britain 0.5 per cent and Italy and Greece should slide further into recession.

The report credits the mining boom for keeping Australia ahead of the pack but says consumer caution and the ‘‘persistently high exchange rate’’ are holding back other parts of the economy.

Dislocation caused by the high dollar is ‘‘generating substantial uncertainties that could weigh on employment, confidence and growth, with potential negative spillovers on house prices’’.

Australian house prices, along with those in Canada, France and Sweden are still ‘‘very high relative to rents and incomes’’, pointing to further falls.

Welcoming the report, the Treasurer, Wayne Swan, acknowledged it painted a picture of a patchwork economy.

He said tackling those pressures was central to the ‘‘spreading the benefits of the boom’’ package announced in the budget.

The report endorses the budget strategy, saying the decision to concentrate budget cuts on defence and foreign aid should ‘‘limit the negative impact on activity’’.

It finds Australia’s combined state and federal government debt among the lowest of any member nation.

Projections to 2050 give Australia the highest growth rate in the developed world after Chile and Mexico.

China is set to overtake the Usas the world’s biggest economy in 2017.

Trade Minister Craig Emerson this week signed a free trade agreement with Malaysia.