The IMF has revised its global outlook in a special December issue of the World Economic Outlook, incorporating new information concerning the global slowdown underway prior to 11 September and its assessment of the likely effects arising from the terrorist attacks.
However, the IMF paints a very favourable picture of the Australian economy with an outlook for solid economic growth and continuing low inflation. The assessment of Australia sharply contrasts with the weak economic performance expected across the world's major regions.
The IMF has forecast growth in Australia of 3.3 per cent in 2002, supported by low inflation of 2.2 per cent in 2002. The unemployment rate is expected to remain relatively steady at around 7.0 per cent in 2002.
Australia's outlook for 2002 is considerably stronger than the United States' 0.7 per cent, the European Union's 1.3 per cent and Japan's negative 1.0 per cent. Growth for the world economy is now forecast to remain around 2.4 per cent in 2001 and 2002, with a rebound in world growth expected to be delayed until mid 2002.
The strong domestic outlook is welcome recognition of Australia's strong economic fundamentals and an endorsement of the Government's economic management.
This updated IMF assessment is consistent with that in the Mid-Year Economic and Fiscal Outlook.
Developments over recent months have further clouded the risks surrounding the world outlook. While policy has generally moved quickly across the world to support recovery, the IMF cautions the need for policy makers to remain vigilant to the possibility of weaker outcomes in the world economy in the period ahead.