Another grim report card for Aussie economy
The Albanese government has been hit with more grim news on the state of the economy, with a major global body predicting a further slow down in growth. The International Monetary Fund has forecast Australia’s. . .
The Albanese government has been hit with more grim news on the state of the economy, with a major global body predicting a further slow down in growth. The International Monetary Fund has forecast Australia’s real gross domestic product would grow 1. 9 per cent in 2026 – 0. 1 percentage points lower than its previous forecast – and 1. 7 per cent in 2027. The IMF has also downgraded its prediction for global 2026 growth – down to 3 per cent, from its 3. 1 per cent prediction earlier this year. But it has upgraded the projection for 2027 to 3. 4 per cent, from 3. 2 per cent. Treasurer Jim Chalmers was playing a straight bat to the latest economic outlook from the United Nations organisation. “These new IMF forecasts have Australia growing faster this year and next year than every major advanced economy except one,” Mr Chalmers in a statement on Wednesday, comparing Australia with the G7 advanced economies. Camera IconTreasurer Jim Chalmers is talking up the Australian economy after another grim global report. NewsWire / Martin OllmanCredit: News Corp AustraliaBut among 30 large economies modelled by the IMF, which make up 83 per cent of global economic output, Australia’s ranking falls to 21st in 2027. Australia’s average economic growth rate in the five years to 2027 was forecast to be 1. 8 per cent, the lowest, other than during the pandemic, since 1984. Mr Chalmers said external factors were the major players affecting the economy. “The IMF is clear that two of the biggest factors shaping the outlook for economies over the next two years are how exposed they are to the fuel shock and the AI boom, and Australia is well-placed to manage both. ”. Opposition Leader Angus Taylor is expected to seize the opportunity to attack the government’s economic credentials with a speech in Sydney on Thursday. The IMF global report follows another grim outlook from the OECD this week, which warned wages had been unable to keep up with persistently high inflation, leading to falling living standards. “This sustained erosion of purchasing power points to persistent pressures on household incomes, even as the labour market has remained broadly solid,” the OECD said of Australia. “These pressures are compounded by a decline in the real minimum wage between April 2025 and April 2026, placing Australia among only 11 OECD countries where this occurred and further weighing on the incomes of the lowest-paid workers. ”Meanwhile on Wednesday, the Reserve Bank reiterated its warning that Aussies may have to suffer through higher unemployment if it is to bring down rates. Camera IconThe RBA has again warned unemployment may need to rise before interest rates can fall. NewsWire / John AppleyardCredit: Supplied“We may need some period of low inflation and higher unemployment to bring expectations back down if they start drifting up,” the RBA’s chief economist and assistant governor Sarah Hunter said in an address to the Australian Conference of Economists. “Some economic costs are unavoidable … All policymakers can do is strike a balance in the face of a worsening trade-off. ”She also said that the unemployment falling to 3. 5 per cent after the pandemic had led to a “sharp pick-up in inflation”.