The IMF's latest World Economic Outlook (WEO) serves to highlight the resilience of the Australian economy as a standout performer in a subdued global economic environment.
Our economy is still expected to grow faster than advanced economies as a whole, both this year and next.
The IMF has revised down its global growth forecasts for 2013 and 2014 citing more protracted recession in the euro area as well as slower than expected growth in key emerging market economies.
The IMF forecasts global GDP growth of 3.1 per cent in 2013, down slightly from the 3.3 per cent forecast in the April WEO. Global GDP growth in 2014 is also expected to be slightly weaker and is now forecast to be 3.8 per cent, down from 4 per cent in the April WEO.
The IMF anticipates that conditions in the euro area will remain weak this year, with GDP contracting by 0.6 per cent, before growing by 0.9 per cent in 2014 — provided that the momentum for reform is maintained. Meanwhile, the IMF anticipates that the United States economy will expand by 1.7 per cent this year, although noting that harsh budget cuts will weigh on growth.
In contrast to the recession in the euro area and subdued growth in the US, the IMF forecasts our region will continue to perform strongly and underpin global growth.
While growth forecasts have been revised down slightly since the April WEO, China and India are still forecast to grow a solid 7.8 per cent and 5.6 per cent respectively in 2013.
The IMF however warns that downside risks, both old and new, still dominate the outlook.
Australia is not immune from global economic and financial uncertainty. This underlines the need for responsible settings and policies to help manage the transition underway in our economy, and to support productivity, jobs and growth in the face of ongoing global economic weakness.
9 July 2013