The IMF has revised up its growth forecast for the Australian economy, underpinned by a

stronger world outlook in the latest World Economic Outlook.

The IMF expects the Australian economy to grow by a solid 3.9 per cent in

2000, and 3.5 per cent in 2001.

The IMF expects Australia’s low inflation environment to be sustained. Abstracting

from the one-off shift in the price level from the introduction of The New Tax System,

the IMF forecasts on-going inflation of around 2 per cent.

Stronger world growth will support Australian exporters, with the IMF expecting

Australia’s current account deficit to fall to 5.1 per cent of GDP in 2000,

having peaked at 5.7 per cent in 1999. The Olympics will have a strong positive

impact on Australia’s exports during the current year. A further fall in the current

account deficit to below 5 per cent is expected by the IMF in 2001.

With regard to the world economy, the IMF expects world economic growth to strengthen

over 2000, with faster growth across the US and Europe and a continuing recovery in Japan.

In 2001, world growth is expected to moderate slightly towards its long-run average growth

rate, with an easing in growth in the US partially offset by a pick-up in Japan. Europe

and Non-Japan Asian economies are expected to broadly maintain their growth momentum.

World inflation is expected to remain low in both 2000 and 2001.

CANBERRA

12 April 2000