The Australian economy is set to be hit by slower than expected global growth over the next two years.
Create a free account to read this article
$0/
(min cost $0)
or signup to continue reading
The International Monetary Fund has revised its global economic growth forecast for 2019 to 3.5 per cent, down 0.2 percentage points on its previous estimate, and 3.6 per cent for 2020 (down 0.1).
In its latest World Economic Outlook, the IMF warns risks to global growth include tightening financial conditions, trade tensions between the United States and China, a possible "no deal" exit by the UK from the European Union and a stronger than expected slowdown in China.
"If countries resolve their differences without raising distortive trade barriers further and market sentiment recovers, then improved confidence and easier financial conditions could reinforce each other to lift growth above the baseline forecast," the report says.
"However, the balance of risks remains skewed to the downside."
Apart from resolving trade issues, the IMF has recommended countries look at their domestic financial and economic policies as a buffer.
"Across all economies, measures to boost potential output growth, enhance inclusiveness, and strengthen fiscal and financial buffers in an environment of high debt burdens and tighter financial conditions are imperatives," the report says.
Launching the report, the IMF's Gita Gopinath said: "Where fiscal space is low, fiscal policy needs to adjust in a growth-friendly manner to ensure public debt is on a sustainable path while protecting the most vulnerable."
Shadow treasurer Chris Bowen said it was an important and timely warning.
"Labor is the only major party with economic and tax policies designed to restore the fiscal buffers and pay down debt in a fair way," Mr Bowen said.
"While the Liberal Party looks to cut without notice the spending on basic services that hits low income earners the hardest, the Labor Party is seeking a mandate from the Australian people for tough decisions and tax reform.
"That includes reforms to negative gearing, capital gains tax discount, trusts and excess franking credits, but it also includes bigger tax cuts for low and middle income Australians as well as the Australian Investment Guarantee to encourage business to invest more."
Protecting the most vulnerable also demanded better spending on schools and hospitals, he said.
Australian Associated Press
