The world economy is facing one of the most significant upheavals in financial markets in recent history and is causing a significant slowdown in global growth.
In its World Economic Outlook (WEO), released overnight in Washington, the IMF acknowledges the gravity of the deterioration in the global economic landscape, noting that many of the 'major advanced economies are already in or close to recession' and lowers its global growth forecasts.
Global growth is now expected to moderate to 3.9 per cent in 2008 and 3.0 per cent in 2009 — its slowest pace since 2002.
The IMF notes that financial conditions are likely to remain very difficult and that continuing instability in global financial markets remains a considerable risk to the global economy.
Emerging and developing countries are expected to be affected by the significant slowing in advanced economies, but India and China are still expected to register strong growth.
The Australian economy is not immune from the global difficulties which are slowing the world economy, but we are better placed than most other countries to withstand the fallout.
The IMF expects the Australian economy to grow by 2.5 per cent in 2008 and 2.2 per cent in 2009, considerably higher than the growth outlook for advanced economies.
In particular, the IMF commends Australia's economic management, noting that our sound fiscal position will help provide a buffer against the slowdown in the global economy.
The Rudd Government will continue to engage internationally to strengthen the global financial system and take decisive action domestically to protect our economy from the fallout on international financial markets.