How the Australian economy is performing way better than the rest of the world
Big tick of approval from IMF for Australia
The International Monetary Fund is the prestigious economic think tank funded by 189 countries to promote trade and financial stability.
It regularly provides report cards on the health of the global economy and individual countries… and has been keeping a close eye on the economic fallout of the Covid-19 pandemic.
In its latest report there are some pretty dire forecasts for the global economy BUT some great news in its outlook for Australia. In fact, the IMF reckons we’ll be one of the best performing economies in the world through this coronavirus recession.
The pandemic will lead to a worse-than-expected 4.9 per cent contraction in global economic activity in 2020… 1.9 per cent worse than its previous. forecast.
But Australia will experience a milder-than-anticipated economic contraction of 4.5 per cent this year which is much better than its April prediction of a 6.7 per cent fall.
In fact, Australia is the only advanced economy in the world to be doing better than expected.
Let’s hope that continues.
And the Reserve Bank governor agrees…
Speaking at a leadership forum during the week, RBA Governor Philip Lowe said;
– Australia “has a fantastic set of underlying fundamentals.”
He also reiterated that the Reserve Bank is prepared to do “whatever it takes” to support the economy and workers.
Borrowing now, while interest rates are low, is the right thing to do in order to support future investment.
The Governor upgraded his view of the labour market with the RBA now estimating that hours worked will decline by 10 per cent, rather than the 20 per cent decline previously forecast.
– On the currency; “At the moment, I think it’s really hard to argue that the Australian dollar is overvalued”, and when pushed on whether he was concerned about a strengthening dollar, said, “But I don’t think we’ve reached that point yet.” And a lower currency would help to lift inflation.
and he challenged the Government to use this time to solve key structural issues in the economy once and for all; “A comprehensive reform agenda by government would help the economy lift from the shadow of the virus that could have a permanent impact on the economy.” And, he emphasized that the lack of economic dynamism in Australia is a key concern and the economy needs to leverage advancements in technology.