'Open for business' ... Treasurer Joe Hockey

Treasurer Joe Hockey will deliver the federal budget next month. Photo: Peter Braig

I give up – what’s with the International Monetary Fund publishing an out-of-date forecast for the Australian economy? Has the shadow of official Joe Hockey gloom fallen over its Washington headquarters?

As it was summarised by the AFR, the IMF officially reckons the Australian “economy is likely to remain in the doldrums this year and next” with GDP growth of 2.6 per cent in 2014 and 2.7 per cent in 2015, according to the forecasts released on Tuesday night.

Excuse me – the Australian economy is in the doldrums? That’s not what the Australian Bureau of Statistics is saying. Yet the IMF report was dutifully and widely reported as if it was credible news.

The IMF view is pretty much in line with the doom-laden forecasts of Treasury’s mid-year economic and fiscal outlook (MYEFO) way back in early December. Four months can be a long time in the crystal ball business.

Since the MYEFO show, our economic indicators have been overwhelmingly on the positive side with a very good chance that the 2013-14 financial year will show trend growth or better – an extraordinary achievement.

Retail sales have been almost ridiculously strong for the past six months, building approvals are as good as they ever are, the trade surplus is rocketing along, there are even signs of life in that lagging indicator, the labour market, and the Reserve Bank has reported there’s optimism returning to tourism.

The relative unknown is just how badly the slowdown in resources construction will impact the overall figure. The mining part of that is going to be sharp as the year rolls on, but there’s enough happening in the rest of the economy to think it’s certainly not a one-way bet. GDP growth in the first half of this financial year annualises at 3 per cent with plenty of indications that the second half is finishing stronger than that.

So why has the IMF stuck to the MYEFO script, as opposed to that in the February RBA statement on monetary policy and what’s being suggested by the currency being on the up-and-up, the stock market around multi-year highs and most private sector economists expecting the next interest rate move will be a rise?

Quite simply, it looks like the IMF has been nobbled.

What tends to happen with that august body is that they receive a briefing from our official family and run with it. To come up with the 2.6 per cent figure for 2014, it looks like Treasury has been sat on by the Treasurer’s political requirements ahead of next month’s budget. We’ll have precious little good news around here, thank-you very much.

When asked about the veracity of the MYEFO figures before parliament rose, Hockey ran away from the question by having a lame slap at your correspondent. It’s a strange game that’s being played.

There is the little problem though that, if towing the official line means that the IMF economics team will be made to look dumber than usual, Australia’s Joint Economic Forecasting Group (Treasury, RBA, ABS and PM&C) will have damaged its own credibility and won’t be trusted again. For all that the Abbott government has publicly proclaimed its intention to put its own stamp on the public service, the integrity of that service is actually more important in the longer term than the aspirations of any politician.

There is another possible explanation though – either the IMF has decided for itself or it’s been told by Treasury that it will indeed be a horror budget next month, that Hockey is determined to make a full-speed ahead dash for a surplus in his first term and damn the consequences, that the spending cuts will be so severe as to knock growth down from its trend rate to 2.6 per cent. But the Treasurer wouldn’t do that – would he?

According to the AFR, the surplus-devoted government has actually seen the fastest budget deterioration over the past six months of any of the 29 most advanced economies tracked by the IMF

“The IMF data suggests that without bold changes to taxation and government policies in the May budget, taxes and spending will rise just as the rest of the world swings in the ­opposite direction,” reports Jacob Greber.

“The fund indicated the budget would need to improve by at least $50 billion in today’s dollars by 2020 to have any chance of bringing gross debt down by 70 per cent to a “safer level” equal to 4.7 per cent of gross domestic product.”

But that’s just the IMF talking and the official family here doesn’t really care all that much. For that matter, Australia is not big on the IMF’s list of concerns. It has much bigger issues to deal with – countries that actually have serious economic problems.

Michael Pascoe is a BusinessDay contributing editor.