The IMF's World Economic Outlook released today (WEO) shows that Australia remains a world leader in the global recovery, with stronger growth, lower unemployment and much lower debt than other advanced economies.
The IMF also notes that the global recovery remains uneven, with the Asian region growing strongly . However the recovery is still fragile in most major advanced economies, with downside risks persisting.
Together with today's strong employment figures, the IMF's report shows the Australian economy is still well ahead of the curve and continues to benefit from the Government's strong economic management.
The IMF forecasts the Australian economy to grow by 3.0 per cent in 2010 and 3.5 per cent in 2011 - a stronger outlook than that of the advanced economies as a whole.
The IMF notes that recent financial market turbulence and concerns around sovereign debt in some European economies 'casts a cloud over the outlook', but states that so far 'there is little evidence of negative spillovers to real activity.'
The Asian region is leading the global recovery, with the IMF forecasting growth of 7.5 per cent for Asia in 2010 and 6.8 per cent in 2011. Notably the IMF has revised upward its growth forecasts for China and India in 2010 to 10.5 per cent (up from 10.0 per cent) and 9.4 per cent (up from 8.8 per cent) respectively.
The Australian economy is well placed to benefit from our proximity and links to the world's fastest growing region, with the IMF pointing to robust commodity prices which are boosting domestic demand in our economy.
The IMF is now forecasting the world economy will grow by 4.6 per cent in 2010 and 4.3 per cent in 2011.
The IMF has again reinforced the importance of credible fiscal consolidation strategies. Consistent with this, G20 advanced economies have committed to at least halving their budget deficits by 2013.
By contrast, Australia will be returning to surplus in 2012-13 - three years ahead of schedule and well ahead of any major advanced economy. This represents the fastest positive turnaround in the Government's budget position since the 1960s, and is underpinned by the Government's commitment to strict fiscal discipline.
Australia's net debt is expected to peak at 6.1 per cent of GDP in 2011-12 and then declines. This is half the level expected a year ago and is dramatically lower than that of every other major advanced economy.
The IMF report also emphasises the need for structural reforms to boost long-term potential growth and complement global fiscal consolidation efforts.
The Government is putting in place a range of fundamental reforms that will strengthen our economy and enhance our growth potential - cutting business taxation, reducing red tape for small businesses, boosting national saving and investing in critical infrastructure, including the National Broadband Network.
While the IMF report provides more evidence that our national economy is outperforming the advanced world, we understand that many Australian families and businesses are still doing it tough.
This is why the Government has been determined to deliver its third round of tax cuts starting from 1 July this year, as well as a range of other measures to help with cost of living pressures, such as the Education Tax Refund, the Childcare Tax Rebate and an historic boost to the aged pension.
The Government has also recently struck a breakthrough tax reform agreement with mining companies that will see $10.5 billion returned to the Australian community through higher retirement savings, new infrastructure and business tax cuts especially for small business.
The Gillard Government will continue the strong economic management that prevented a recession in Australia, so that we can further strengthen our economy and help with cost of living pressures.
8 July 2010