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2013 IMF Article IV Consultations With Australia

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HON J. B. HOCKEY Treasurer

Media Release

21 November 2013

2013 IMF ARTICLE IV CONSULTATIONS WITH AUSTRALIA The International Monetary Fund (IMF) has today re-affirmed Australia’s strong economic prospects.

The IMF Article IV Consultation 2013 projects that the economy will return to trend growth of 3 per cent by 2016.

However, the IMF note that there are a number of challenges facing the Australian economy. Excess capacity in the non-mining sector could hold back investment plans and a strong Australian dollar may continue to create headwinds for overall growth.

They note Australia’s public debt has increased since the Global Financial Crisis. They observe that the broad aim of reaching a fiscal surplus over the medium term would help rebuild buffers and increase the policy scope to deal with adverse shocks.

The IMF suggest that sustaining a surplus could require sizeable cuts in projected spending and emphasise that the Commission of Audit will play an important role in identifying possible policy actions.

They note that a significant increase in labour productivity will be needed to maintain growth in Australian living standards over the coming decade. On this note, the IMF welcomes the Coalition Government’s focus on improving productivity, particularly the Government’s stated aim of addressing infrastructure bottlenecks.

The IMF also suggest that a shift to broader-based growth would be helped by making the most of the opportunities offered by a growing Asian middle class, which could support demand for Australia’s services exports such as health, education, tourism and professional services.