Selasa, 06 April 2021

Australian economy expected to grow by 4.5 per cent, IMF forecasts -

The Australian economy is pole vaulting back from the doldrums of coronavirus, with the International Monetary Fund forecasting 4.5 per cent growth this year.

But the international financial institution, headquartered in Washington D.C, projects growth will slow to 2.8 per cent in 2022.

The IMF also expects unemployment will drop to 6 per cent this year and 5.5 per cent in 2022.

The economy contracted by 2.4 per cent in 2020 as the border slammed shut and strict coronavirus restrictions were enforced.

Treasurer Josh Frydenberg told The Australian that Australia was performing “remarkably well” compared to similar countries.

IMF economic counsellor Gita Gopinath credited government fiscal policies and interventions for the growth.

She said the extraordinary policy support of governments and central banks had massively reduced the overall impact of the coronavirus recession.

The IMF’s new forecast is a sizeable upgrade to the fund’s January forecast which predicted the Australian economy to grow by 3.5 per cent this year.

But the recovery hasn’t been cheap.

The JobKeeper program — which subsidised the wages of workers — cost about $130 billion, according to the Prime Minister’s office.

Massive spending — mostly funded by selling Australian Government bonds — means Australia is headed for a trillion-dollars of debt.

IMF expects global growth

The IMF forecast record global growth in 2021, but it warned there was “potential for persistent economic damage”.

The IMF’s World Economic Outlook predicts growth of 6 per cent this year after the contraction of 3.3 per cent in 2020 caused by the pandemic — the worst peacetime downturn since the Great Depression a century before.

IMF chief economist Gita Gopinath said rapid government responses, including $A20 trillion in public funds, prevented a collapse that could have been “at least three times as large”.

But she warned that COVID-19 remains the critical factor in the economic recovery, and the slow rollout of vaccinations in many developing countries risks both a worsening outbreak, and also a more troubling future.

“The outlook presents daunting challenges … and the potential for persistent economic damage from the crisis,” she said in Tuesday’s report, warning against withdrawing support too soon.

She said that what was required was “above all, resolving the health crisis everywhere”, or “gaps in living standards could widen significantly, and decades-long trends of global poverty reduction could reverse”.

Developing countries have already seen per-capita income slashed and poverty increase after economic damage from the pandemic.

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Ms Gopinath told reporters that governments must be mindful of rising debt and deficits, and use a “tailored approach which is specific to where they are in terms of the speed of their recovery.”

And because the pandemic “has gone on for much longer than one might have expected” governments should target their scarce resources, she said, adding that the IMF supports a global minimum corporate tax.

The United States, which deployed another $A2.5 trillion last month, is expected to grow by 6.4 per cent, among the fastest expansions in the world and 1.3 points higher than the January forecast.

China’s economy, one of few that grew last year, will expand 8.4 per cent in 2021, the IMF revealed.

The Euro Area will see GDP expand 4.4 per cent, slightly better than the prior forecast.

Ms Gopinath said “even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible.”

A day after US Treasury Secretary Janet Yellen called on G20 countries to adopt a minimum tax, Ms Gopinath noted the “large amount” of tax avoidance with “countries sending money to tax havens.”

“That’s reducing the tax base on which governments can collect revenues and do the necessary social and economic spending that’s required,” she said. “It is a big concern of ours.”

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G20 finance ministers are expected to discuss the issue when they meet, virtually, on Wednesday.

As the pandemic caused business and trade shutdowns, the IMF calculates that an additional 95 million people are expected to have entered the ranks of the extremely poor in 2020, and there are 80 million more undernourished than before.

That demands international co-operation to ensure widespread vaccination campaigns to address the “deeply iniquitous” vaccine access, where rich countries are scooping up the bulk of the supply.

While the US is expected to surpass its pre-pandemic GDP level this year, and China did so last year, many others will not hit that threshold until 2022 or well into 2023 for developing nations.

The IMF urged policymakers to safeguard the recovery through policies to support firms, including ensuring adequate supply of credit and providing workers with wage support and retraining.

That also calls for resources to help children who have fallen behind in their education during the pandemic, the fund said.

It also cautioned that massive government aid has provided liquidity to support economies during the COVID-19 pandemic, but also caused stock prices to surge beyond their value.

The “unprecedented policy support may have unintended consequences,” including “excessive risk-taking in markets,” the IMF said.

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2021-04-06 16:17:49Z

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