NO.099

IMF Points To Continued Solid Growth for Australia

The IMF has revised its global outlook in a special December issue of the World

Economic Outlook, incorporating new information concerning the global slowdown

underway prior to 11 September and its assessment of the likely effects

arising from the terrorist attacks.

However, the IMF paints a very favourable picture of the Australian economy

with an outlook for solid economic growth and continuing low inflation. The

assessment of Australia sharply contrasts with the weak economic performance

expected across the world’s major regions.

The IMF has forecast growth in Australia of 3.3 per cent in 2002, supported

by low inflation of 2.2 per cent in 2002. The unemployment rate is expected

to remain relatively steady at around 7.0 per cent in 2002.

Australia’s outlook for 2002 is considerably stronger than the United States’

0.7 per cent, the European Union’s 1.3 per cent and Japan’s negative

1.0 per cent. Growth for the world economy is now forecast to remain

around 2.4 per cent in 2001 and 2002, with a rebound in world growth expected

to be delayed until mid 2002.

The strong domestic outlook is welcome recognition of Australia’s strong economic

fundamentals and an endorsement of the Government’s economic management.

This updated IMF assessment is consistent with that in the Mid-Year Economic

and Fiscal Outlook.

Developments over recent months have further clouded the risks surrounding

the world outlook. While policy has generally moved quickly across the world

to support recovery, the IMF cautions the need for policy makers to remain vigilant

to the possibility of weaker outcomes in the world economy in the period ahead.

CANBERRA

19 December 2001