The IMF fact-checked Josh Frydenberg, after the treasurer claimed its grim forecasts didn't take the government's wage subsidy into account

The government has been left red-faced after trying to downplay the economic downturn. (Photo by Tracey Nearmy, Getty Images)
  • The IMF has shot back at Josh Frydenberg after the Treasurer downplayed its forecasts.
  • Having represented the IMF’s analysis as precluding the government’s wage subsidy, the IMF issued a statement correcting the record, and insisting it had considered it.
  • It paints a worse image of the Australian economy, with even the $130 billion policy not saving the country from a 6.7% contraction in 2020.
  • Visit Business Insider Australia’s homepage for more stories.

If you thought the dismal science of economics was immune from squabbles, you’d be wrong.

The International Monetary Fund (IMF), the global financial cooperative, has had to come out and correct Treasurer Josh Frydenberg over its latest forecasts on how the economy will fare in 2020.

Having this week forecast a 6.7% contraction for Australia this year, or around a $130 billion loss, the IMF numbers were dismissed by the Treasurer for not having considered its JobKeeper wage subsidy program into its estimates.

“As the IMF a couple of weeks ago were finalising their numbers a couple of weeks ago, it was before the JobKeeper payment was announced,” Frydenberg told media on Thursday, downplaying the IMF’s warning.

While Frydenberg may have assumed as much, considering the likely impact of the government’s policy, the IMF has now been forced to correct the record, releasing a statement on Thursday clarifying its forecasts were indeed correct – and up to date.

“Our projections for Australia take into consideration the large and beneficial JobKeeper program,” the monetary body.

Its original analysis had suggested as much, noting that the estimates were current as of 7 April, a full week after the wage subsidy had been announced.

The fact that the Treasurer was fronting the media for a couple of days, scoffing at the economic forecast for Australia should leave Frydenberg red-faced, the Opposition Finance Minister said.

“This is a stunning rebuke,” Jim Chalmers said in his own statement. “Either the Treasurer knew his claims were false and he repeated them anyway or he didn’t understand the IMF forecasts – either way, that’s troubling.”

Chalmers added that the current crisis required the government to work constructively and “to be upfront and honest about the challenges ahead”.

“The Treasurer should not be adding to the substantial uncertainty, which already exists around forecasts for jobs, the economy and the future.”

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.