IMF's 'big tick' for Australia's economy
The International Monetary Fund has given a stamp of approval to Australia's economic policies, commending the Reserve Bank's easy monetary stance and saying there was room to ease further if needed.
In a summary of its annual review of Australia's economy, the IMF said its directors also supported the government's budget-tightening plans.
"They welcomed the intention to maintain budgetary surpluses over the medium term, thus strengthening fiscal buffers against future shocks and the long-term cost of population aging," the IMF said. "Directors noted nevertheless that, in the event of a sharp deterioration in the economic outlook, and hence revenue underperformance, delaying the return to surpluses could be an option."
The IMF is forecasting growth of 3.25 per cent in 2012, faster than any major advanced economy.
The report also reviewed Australia's financial sector, finding it "sound, resilient, and well managed." However, financial risks remained, including from high household debt and house prices, and reliance on offshore funding.
The IMF said the dollar was still a bit above its long-term average, hurting non-mining sectors and widening the current account deficit. It called on the government to continue to increase national saving, whether by reducing the budget deficit or increasing pension contributions.
'Big tick' for Australia
Treasurer Wayne Swan jumped on the report, saying the IMF had given the Australian economy a ‘‘big tick’’.
However, the report also makes it clear that Australia is not immune from the fallout from future intensification of the European debt crisis, or turmoil in international financial markets.
Mr Swan said the IMF was very supportive of government budget rules that strike a balance between the benefits of reducing public debt and the need to contain any adverse impact on economic growth.
‘‘The IMF projects a solid economic outlook for the Australian economy in the face of ongoing global headwinds,’’ Mr Swan said.
‘‘The government understands that not everyone is doing it easy, but reports like these demonstrate why all Australians can be proud of what we have achieved working together in the face of acute global challenges,’’ Mr Swan said.