IMF Commends Australia's Exemplary Economic Management
IMF COMMENDS AUSTRALIA'S EXEMPLARY ECONOMIC MANAGEMENT
The IMF Executive Board has commended Australia’s exemplary economic management and recognised Australia as being at the forefront of international best practice in its annual assessment of the Australian economy. Sound fiscal, monetary and structural policies have created the conditions for a continued expansion, supported by high employment levels.
IMF staff consider that Australia’s strong economic performance is likely to continue, with growth above 4 per cent in 2007 and core inflation to remain around 2½ per cent, well within the RBA’s target band. The IMF considers that this outlook may surprise on the upside, should resource export volumes increase and rural incomes recover.
The IMF Executive Board praised Australia’s very strong fiscal position, with fiscal policy firmly focused on medium and long-term objectives. IMF staff consider that this year’s Budget was supportive of long-term objectives, as many of the new initiatives are focused on increasing labour participation and boosting productivity.
The IMF praised Australia’s efforts to improve long-term fiscal sustainability with the release of the second Intergenerational Report and noted that a number of measures have been put in place to better control spending. The report notes, however, that the long term financing gap is forecast to reach 3½ per cent of GDP by 2047, and continued attention to the efficiency and effectiveness of spending will be the key to preserving long-term fiscal sustainability. In addition, the report notes that the Future Fund has helped Australia to be well prepared for an ageing population .
The IMF has praised Australia’s record in undertaking comprehensive labour and product market reforms, and noted the large payoff in terms of macroeconomic performance. They have highlighted the importance of making progress on the National Reform Agenda, and have praised the focus on human capital, competition and regulatory reform.
The IMF Public Information Notice is attached, with the complete Article IV Staff Report and related papers available at the IMF’s website http://www.imf.org and on the Treasury web site http://www.treasury.gov.au.
13 September 2007
Contact: David Gazard - 02 6277 7340
13 Sep 2007
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