I welcome today's release of the International Monetary Fund (IMF) Article IV Report on Australia, which concludes "that the sound macroeconomic framework should permit Australia to weather the global downturn and contain inflationary pressures."
The Government has repeatedly said that while Australia is not immune from global economic turbulence, we are well-placed to withstand the fallout, and today's IMF report is further evidence of that resilience.
The report shows Australia's economic strength is the result of responsible economic management, the strength of our banking and regulatory systems, and the fiscal position outlined in the Rudd Government's first Budget.
In particular, the report notes that IMF "Directors welcomed the support that prudent fiscal policy is providing for monetary policy."
The IMF Executive Board considered that Australia's banking system remains resilient, with stable profits, high capitalisation and few non-performing loans. This was evident in stress tests undertaken by the IMF and presented in their report, which showed that Australian banks are able to absorb 'extreme' shocks.
The IMF considers that the outlook for the economy is more uncertain than usual due to large countervailing forces impacting on the economy, with the commodity boom providing a substantial stimulus and the global downturn exerting a contractionary effect. IMF staff forecast that real GDP growth will moderate as required to bring underlying inflation back within the RBA's target range.
The IMF also welcomes the Government's ambitious reform agenda, concluding that this agenda should enhance the flexibility of the economy and lift productivity and labour force participation.
On an annual basis the IMF consults with the Australian authorities, private sector economists and academia to provide an independent and comprehensive assessment of Australia's economic performance. This forms part of its program of economic consultations with all IMF member countries.
24 September 2008