NO.091

9.00pm (AEDST), Tuesday 19 September

2000

IMF forecasts strong Growth for Australia

In its latest World Economic Outlook (WEO), the IMF is forecasting continued

strong growth for the Australian economy.

The IMF expects the Australian economy to grow by 4.0 per cent in 2000,

and 3.4 per cent in 2001.

A stronger contribution from net exports is expected to be supported

by higher world growth, the lower exchange rate and higher commodity prices.

The rebalancing of demand from domestic to external sources and the recovery

in commodity prices is expected to result in a lowering of Australias

current account deficit as a proportion of GDP.

The IMF notes that Australia has the second highest level of expenditure

(as a percentage of GDP) on Information and Communication Technology amongst

the Advanced Economies. Australias rapid adoption of new technology is

improving the productivity, efficiency and competitiveness of Australian

companies. Indeed, in its discussion of the extent to which the new economy

has contributed to the growth in US productivity, the IMF note that Australia

is one of the faster growing advanced economies and has achieved higher

productivity growth than the US since 1996.

World economic activity in 2000 is expected to remain very robust. Contributing

to the strong performance in 2000 is the strength of activity in the United

States, a solid European recovery and continued improvement in Japan.

World growth is expected to decline over the course of 2001, reflecting

an expected easing in the United States economy from above potential growth

rates, while the expansions in Europe and Japan are maintained at a solid

pace.

CANBERRA

19 September 2000