A new report by the International Monetary Fund declares that the global economy is in “a dangerous new phase”, thanks to natural disasters, a debt crisis in Europe and financial uncertainty.
The IMF also slashed its predictions for growth in the Australian economy in 2011 in its World Economic Outlook report, down from 3% to just 1.8%. It’s significantly lower than recent predictions by the government and the Reserve Bank of Australia, indicating that a return to budget surplus in 2012-13 will be more difficult than expected.
The IMF predicts Australia’s economic growth in 2012 will be 3.3%, noting that natural disasters slowed growth in Australia, but only temporarily. It also encourages Wayne Swan’s promises to return the budget to surplus, noting: “In Australia, the planned return to surplus by 2012-13 is welcome, as it will increase fiscal room and take pressure off monetary policy and the exchange rate. The mining boom also provides an opportunity to build fiscal buffers further over the medium term and contribute to national saving.”
But Australia is faring better than most, with the growth of most advanced economies globally forecast as “anaemic”. “And even under the most optimistic assumptions, growth in advanced economies will remain low for some time,” says the report.
The IMF even gives itself a slap on the wrist for not acting earlier in the introduction, noting that there was a “… much slower recovery in advanced economies since the beginning of the year, a development we largely failed to perceive as it was happening”.
What does this mean for Australia? No need to worry, says Michael Stutchbury in The Australian. “The global economy’s two-speed divide is deepening. Luckily for us, Australia remains in the fast-speed, Chinese lane,” writes Stutchbury.
Meanwhile, minutes from the most recent RBA board meeting noted that despite overseas trends, in general the Australian economy — and its banks — are holding on well:
“The local sharemarket also moved generally in line with its global counterparts, but in contrast to recent months, it tended to outperform other markets. Earnings reports released during the month were, on balance, either in line with or in excess of analysts’ expectations, although some of these expectations had been pared back in recent months …
… The Australian banking system remained in a relatively strong condition. The recent global market turbulence contributed to falls in Australian banks’ share prices and some tightening in wholesale funding conditions, but the overall effect had been modest compared with the experience in most other countries and in 2008.”
The RBA is sitting in a nice spot compared to its global counterparts, writes Michael Pascoe in The Sydney Morning Herald: “There’s room to cut, room to increase and plenty of room to do nothing at all. This is, after all, a relative safe haven in a sea of uncertainty. Just ask foreign central banks.”
Our own Treasurer Wayne Swan has just been declared the Euromoney Finance Minister of the Year for 2011, mostly for his role in implementing the economic stimulus package. It’s only the second time an Australia has won it, the last being Paul Keating in 1984.
“The award is the first piece of good news for the Gillard government for some time and vindicates the economic argument it has been trying to make that Australia is faring better than the rest of the world, despite its internal economic problems,” notes Phillip Coorey in the SMH.
The silence about this from the conservatives will of course be deafening.
We have already seven a preemptive strike from the OZ. They had Sutchbury write an article trying to say that it was of no consequence that Swan got this award in rogcognition of basically the Rudd Government as a whole approach to the GFC alone out of the developed world. With the results of success being Australia’s alone.
It galls the right wing no end that it is to Labor that this award has gone. Showing what the world thinks of Coaliton Treasurers. Pedestrian, Competent maybe depending on your views of economic policy. We do know that worlds best and and world class do not apply.
A bit hard to say Labor are bad economic managers when they are the side of politics that get international awards for that management.
I don’t know, The Roth – there’s always political capital to be made if you just emphasise the talking points you want at the expense of the facts. And Australians at the moment seem to love nothing more than to hear how hard we’re all meant to be doing. In The Age today, for example, the feedback from readers seems to be disbelief that Australia isn’t on the verge of collapse and that it somehow should be and it’ll all be Labor’s fault when it happens. It’s like people want it to happen. With a crowd like that, it wont be hard for reactionaries to talk-up the negative.
It ain’t silent here THE_ROTH, what a load of BS, i work in retail and i can assure you business is as bad as it ever has been in our history, people have their hands in their pockets. The recession is on it’s way and this inept Government will not be able to handle it one bit. Keep on sticking your head in the sand if you want, but this Government must go and go asap! Labor always have been and always will be fiscally incompetent, KRudd inherited a might big surplus and blew it within 2 years along with his own job and as for that Bradbury award they given Swan… in the words of a once great tennis player “you cannot be serious”
JOHNFROMPLANETEARTH
You post reads like the brainwashed rantings of a lemming.
As a Government Labor gave cash handouts to the people who went and spent it in the retail sector.
Lack of confidence and people not spending is the result of fear. Who is stoking fear? It is not Labor. It is the Coalition talking up the fear by distorting and misrepresenting. You just had to see the last 4 Corners programme to see this.
Cory Bernadi went to strategy sessions alongside Tea Party Strategists at his own admission.
Like it or not you have to accept by the only way we know the International community has stated. Labor are world’s best. They have given awards to prove it.