The IMF has temporarily downgraded Australia's economic growth prospects

Daniel Maurer/AFP/Getty Images

Australia’s economic growth is about to stumble, according to forecasts in the latest update to the World Economic Outlook from the IMF.

The IMF says 2017 growth in Australia will be just 2.2%, down from the January forecast of 3% and from the 2.5% in 2016.

“Growth is expected to soften temporarily to 2.2% in Australia, where housing investment and mining exports in the first half of the year were undermined by bad weather,” says the IMF.

The forecasts show a pickup in 2018 with GDP increasing to 2.9%.

The IMF says economic activity globally is strengthening, with growth projected to rise to 3.6% in 2017 and 3.7% in 2018.

The May federal budget put real GDP growth at 2.75% for 2017-18, up from 1.75%, and 3% in 2018-19.

Treasurer Scott Morrison says the government’s forecasts will be updated in the midyear statement at the end of the year.

“But as I said in a speech to the Business Council a few weeks ago, what we’re seeing is a very strong pick-up in employment and we’re seeing growth tracking about where we had expected it to,” he told ABC Breakfast News.

He says current data is encouraging.

“Just this week we have had the NAB Business Survey which showed an improvement in business confidence and business conditions being, what they described as being, rock solid,” he says.

“On top of that, we had the best consumer confidence figures that we’ve seen in about 11 months, where we’ve got more optimists than pessimists that are out there on the Australian economy.

“So, the better days ahead I spoke about in the Budget is being borne out by this evidence and data. Let’s not forget 325,000 Australians getting a job last year.”

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