In the years leading up to the outbreak of the financial crisis, European banks’ claims within Europe had grown from 36 % of GDP at the end of the 1990s to 77 % in 2008. Since then, however, these claims have fallen back to around 48 % of GDP.
As always, though, there is a range of uncertainty around this forecast. But the central outlook is for growth at around our estimate of potential growth in the Australian economy. Given this, over these two years the unemployment rate is forecast to be around 5 per cent.