Australia’s economy scrubs up well under an annual assessment by the International Monetary Fund (IMF).
But the there are still significant risks and uncertainties ahead.
“Australia has enjoyed robust growth despite the commodity price and mining investment bust,” says the IMF.
Much of that is down to the resilience of the economy and strong policy from government.
The IMF supported Australia’s low interest rate policy, the government’s work to bring down the budget deficit, the strengthening of the banking system and regulatory measures to reduce risks associated with the booming housing market.
However, Australia has not been immune to some elements of what the IMF called the “new mediocre”.
Wage and price pressures have been weak, underemployment has risen, and private business investment outside mining has been lackluster.
“While the balance of risks to the growth outlook has improved, there remain significant risks and uncertainties, notably weaker-than-expected domestic consumption, housing-related vulnerabilities, the rise in protectionist policies in the global economy, and a significant slowdown in Australia’s main trading partners,” according to comment by executive directors at the IMF.
The IMF directors support the government’s plans to balance the federal budget over four years and make expenditure more growth-friendly.
“Directors welcomed the government’s structural reform agenda to boost productivity through fostering innovation and strengthening competition, especially in the services sector,” the IMF says.
“They commended the authorities for their commitment to an open economy in trade, foreign investment, and immigration.”
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