Al-anwar Newspaper English news in Australia
Australia’s economic growth will slow as the global economy faces “perilous” challenges, persistently high inflation and risks of further financial turmoil, the International Monetary Fund said in its latest global outlook report.
The country’s gross domestic product grew last year by 3.7% but is expected to expand just 1.6% this year and 1.7% in 2024, according to the IMF’s forecast – potentially less than population growth.
Its figures are similar to those from Australia’s Treasury and the Reserve Bank, the latter predicting 1.5% growth this year and next.
“The situation in the world has become more complex and more challenging even over the course of the last few months,” Jim Chalmers told the ABC on Wednesday. “And so we won’t be completely immune from that.”
Chalmers heads to Washington DC this week for a gathering of G20 finance ministers before returning to Australia to prepare for his second federal budget on 9 May.
“The Treasury does expect our own economy to slow considerably later this year,” he said. “Because of that combination of a slowing global economy and the impact of higher interest rates here at home as well. So we’ve got a lot coming at us from around the world.”
Globally, growth will ease from 3.4% in 2022 to 2.8% this year before “settling at 3% five years out – the lowest medium-term forecast in decades”, the report said. The slowdown will be particularly evident in advanced economies, with 1.3% growth expected this year, and the UK and German economies shrinking.
“The anaemic outlook reflects the tight policy stances needed to bring down inflation, the fallout from the recent deterioration in financial conditions, the ongoing war in Ukraine, and growing geo-economic fragmentation,” it said.
Headline inflation internationally will ease from 8.7% last year to 7% this year as commodity prices fall but underlying, or core inflation, will decline more slowly. Price increases are unlikely to return to targets set by central banks before 2025 in most cases. For Australia, consumer price increases are projected to slide from 6.6% in 2022 to 5.3% this year and 3.2% in 2024. That compares with the RBA’s latest estimates for CPI to come in at 4.75% this year and 3.5% in 2024.
IMF’s chief economist, Pierre-Olivier Gourinchas, said higher interest rates and slowing growth could expose more banks to the risk of failure, as seen last month, with some nations also struggling to repay debt.
“We are therefore entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner,” Gourinchas said.
While the global economy has regularly endured cycles of increasing growth and slowdown, the recent strains “may also reflect more ominous forces”, the IMF said.
