The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

25 January 2011


IMF World Economic Outlook - January 2011 Update

In its World Economic Outlook update released today, the IMF has upgraded its forecast for global economic growth, although it warns downside risks remain and the recovery remains uneven.

The IMF expects global growth of 4.4 per cent in 2011, slightly higher than its October forecast, and 4.5 per cent in 2012. This is largely driven by better-than-expected activity in the second half of 2010 and new fiscal policy initiatives in the United States.

The report highlights the two-speed nature of the global economy, with subdued growth and high unemployment in advanced economies, and robust growth in emerging and developing economies, particularly those in our region.

The IMF is forecasting developing Asia to grow by 8.4 per cent in both 2011 and 2012, with China and India forecast to grow at 9.6 per cent and 8.4 per cent respectively in 2011.

Australia is in a strong position to benefit from continued strength in our neighbouring economies, which should give us further confidence in our own economic outlook as we begin the long task of rebuilding from the Queensland floods.

In contrast, activity in advanced economies is expected to remain sluggish at 2.5 per cent in both 2011 and 2012, a rate which the IMF considers insufficient to make a dent in the high unemployment rates in many of these countries.

While financial market conditions are generally expected to remain stable, the IMF warns that stresses remain elevated in parts of the euro area, and that rapid action is urgently needed to reduce concerns around sovereign debt.

The IMF has also stressed the importance of credible medium-term fiscal consolidation strategies and broader reforms to strengthen the global financial system.

Australia's strict fiscal discipline means we're on track to return the Budget to surplus in 2012-13, well ahead of any major advanced economy, and will see net debt peak at dramatically lower levels than our peers.

25 January 2011