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IMF world economic outlook.



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Press Release

 

Treasurer

 

NO.19

IMF WORLD ECONOMIC OUTLOOK

 

The IMF has confirmed the favourable outlook facing the Australian economy.

 

The IMF has revised up its growth forecasts for Australia. In its World Economic Outlook, the IMF forecasts Australia n growth of 3.1 per cent in calendar year 1999 and 3.2 per cent in 2000. These figures imply financial year forecasts of around 4¼ per cent in 1998-99 and 2¾% per cent in 1999-2000, suggesting that the MYEFO forecast for 1998-99 will be easily achieved. For 1999-2000, the IMF’s forecast is the same as the MYEFO forecast.

 

The IMF expects world growth to remain relatively weak in 1999, similar to that in 1998, before recovering solidly in 2000. In 1999, world economic growth will continue to be supported by strong growth in the US and Europe, although less than in 1998, while economic contraction in Japan is expected to moderate. The IMF notes that activity in the Asian crisis economies is close to its trough, with GDP growth expected to strengthen over 1999 and 2000.

 

Against this backdrop, economic growth in Australia is expected to moderate. This is also reflected in the Government’s forecasts. The difficult international environment clearly points to the need to maintain the pace of economic reform to further strengthen the Australian economy.

 

The IMF report notes the success of the strong marketing efforts of our exporters in redirecting commodity exports to markets outside Asia.

 

The IMF also notes the need to maintain fiscal discipline, stating that ‘high priority must continue to be attached to raising national saving, given Australia’s large external liabilities, which precludes discretionary fiscal easing beyond the personal income tax cuts in the tax reform package to be implemented next year’.

 

21 April 1999

 

 

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