The International Monetary Fund has today delivered another big tick for the Government's economic management during the most challenging period of global volatility in three quarters of a century.
The 2012 IMF Article IV Staff Report and Financial Sector Assessment Program reports released today provide an overwhelmingly positive assessment of our economy, underpinned by low unemployment, contained inflation and a well-managed financial system.
The Government understands that not everyone is doing it easy, but reports like these demonstrate why all Australians can be proud of what we have achieved working together in the face of acute global challenges.
The IMF recognises that Australia is one of only a small handful of advanced countries to have avoided a recession during the global financial crisis and commends the Government's response.
The IMF praises Australia's 'well co-ordinated response' to the crisis, saying that as a result, 'five years on, both the economy and the financial sector continue to outperform most of their peers'.
The IMF argues that this 'adept handling of the fallout from the GFC, prudent economic management, and strong supervision of the financial sector' has kept Australia 'on the dwindling list of AAA rated countries'.
The IMF is very supportive of the Government's responsible budget rules, reporting that our 'fiscal consolidation path strikes a balance between the benefits of reducing public debt and the need to contain any adverse impact on economic growth.'
The IMF projects a solid outlook for the Australian economy in the face of ongoing global headwinds, reiterating its forecast of 3¼ per cent real GDP growth in Australia in 2012 - faster than any major advanced economy.
Despite our ongoing strong performance and positive outlook, the IMF makes it clear that Australia is not immune from the fallout from any future intensification of the European debt crisis, or turmoil in international financial markets.
However, the IMF supports the Government's current policy mix that combines disciplined fiscal policy with an accommodative monetary policy stance, which sees Australia well‑placed to respond should these risks eventuate. It also highlights that the floating Australian dollar provides an additional cushion against external shocks.
The IMF endorses the Gillard Government's strategy for dealing with longer-term structural transition and capitalising on the opportunities offered by the growth of the Asian economies, as outlined in the White Paper on Australia in the Asian Century. The IMF reiterates its support for what it describes as our well-designed carbon price, which it does not expect to significantly impact growth.
The IMF also finds that the Australian financial regulatory and supervisory framework exhibits a high degree of compliance with international standards and that both ASIC and APRA are extremely effective and well-regarded financial regulators.
The IMF notes the impressive steps that the Australian authorities have taken to strengthen the financial safety net and crisis management framework in recent years. These changes include the establishment of the Financial Claims Scheme and the strengthening of APRA's powers.
The IMF's publications follow extensive assessments of the Australian economy through the Article IV consultations, and of Australia's financial sector as part of the Financial Sector Assessment Program.
Release of these reports is consistent with the Government's support for enhanced transparency of the IMF's bilateral surveillance process.