The IMF is upbeat on the Australian economy

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The International Monetary Fund is forecasting significantly better economic growth in Australia than the latest Treasury forecasts.

In an update to the World Economic Outlook report, the IMF puts GDP in Australia at 3.1% for 2017, up from 2.5% in 2016, and at 3% for next year.

The IMF expects inflation to hit 2% this year, from 1.3% last year, and for unemployment to drop to 5.2% from 5.7%.

The GDP forecast is well ahead of Australian Treasury estimates.

In December, the MYEFO, Mid-Year Economic and Fiscal Outlook, showed slow wage growth and weak inflation combining to constrain GDP to 2%, down from the 2.5% forecast in the May budget. The forecasts showed GDP at 2.75% in 2016-17 and growing to 3% in 2018-19.

“Momentum in the global economy has been building since the middle of last year, allowing us to reaffirm our earlier forecasts of higher global growth this year and next,” says the IMF.

The IMF forecasts the world economy to grow at 3.5% in 2017, up from 3.1% last year, and 3.6% in 2018.

The new projection for 2017 is marginally higher than what was expected in the last update to the World Economic Outlook.

“This improvement comes primarily from good economic news for Europe and Asia, as well as our continuing expectation for higher growth this year in the United States,” says the IMF.

The IMF points to improved commodity prices.

Natural gas prices have increased in Europe on account of supply tightening and higher oil prices.

“Coal prices have rallied, by 21.%t, following government-led reductions in coal production in China and outages in Australia that affected production and shipment,” says the IMF.

Here are the IMF forecasts in detail:

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