The IMF's World Economic Outlook (WEO) has overnight reaffirmed the remarkable resilience of the Australian economy in the face of a fragile and uneven global recovery, with the Australian economy expected to significantly outperform advanced economies as a whole.
While the IMF notes that global economic prospects have improved, the global recovery remains unbalanced and hostage to actions by policymakers in the world's major economies.
The IMF expects growth in advanced economies to be subdued and uneven, with conditions on either side of the Atlantic diverging markedly. The euro area is forecast to stay in recession this year, while the economic fundamentals in the United States have improved despite a substantial fiscal consolidation weighing heavily on growth in 2013.
After a long period of deflation and stagnant growth, Japan has announced plans for aggressive fiscal stimulus, quantitative easing and a new monetary framework. This significant policy shift is expected to support Japan's growth in the short term.
The IMF has kept its forecasts for global economic growth broadly unchanged from the January WEO Update. The global economy is forecast to grow at 3.3 per cent in 2013, down slightly from 3.5 per cent in the January WEO update. The forecast for 2014 is slightly lower at 4 per cent.
While some of the worst crisis risks have been defused by US and European policymakers, the IMF warns policymakers must continue to address the deep-seated challenges that still exist in many advanced economies.
The IMF again underscores the urgent need for Europe to make progress towards a fiscal and banking union, and for the US and Japan to put in place a credible path for medium-term fiscal consolidation. The report also highlights the importance of pursuing gradual fiscal consolidation that supports growth in the short term in advanced economies.
Emerging and developing economies are forecast to perform strongly, with our region driving the lion's share of global growth. China will grow 8.0 per cent in 2013 and 8.2 per cent in 2014, while India will grow 5.7 per cent in 2013 and 6.2 per cent in 2014, according to the IMF forecasts.
Despite the impact of the high dollar, global uncertainty and challenging conditions faced by some sectors, the IMF expects the Australian economy to grow solidly by 3.0 per cent in 2013 and 3.3 per cent in 2014. In 2013, the IMF forecasts the Australian economy to grow more than twice as fast as advanced economies as a whole (1.2 per cent).
The IMF also expects Australia's unemployment to remain dramatically lower than levels seen across many advanced economies.
This positive outlook for the Australian economy builds on our record of outperformance over the past five years.
Despite some very challenging and unusual conditions in the global economy over the past five years, the Gillard Government has consistently struck the right balance to support jobs and growth in our economy.
The choice Labor made to protect Australian jobs and economic growth speaks for itself - the Australian economy is now more than 13 per cent bigger than it was when the Government came to office, while around half of all advanced economies have contracted over this period. Around 900,000 jobs have been created in Australia since Labor came to office, while 28 million jobs have been shed around the world over the same period.
This week, I will travel to Washington for meetings of the G20, IMF and World Bank. These meetings will provide a timely opportunity to discuss recent economic developments and the need for policymakers to get the global recovery onto a sustainable path.
MELBOURNE