There will be a “real emphasis on economic security” in the next federal budget in response to a range of concerns about the global economy, Treasurer Jim Chalmers said today.
He described current economic conditions as being a “tricky balance of risks” as inflation remains an issue.
“What you'll see is a real premium on responsibility and these conditions, but also a real emphasis on economic security,” he said.
“We’ve got supply chains which are straining, and we’ve got a global economy which is fragmenting and transforming.”
The April World Economic Outlook predicts global growth in 2024 to rise by 3.2 percent, 0.1 percentage points higher than signalled in the previous January update.
While low by historical standards, the forecast has been revised up a total of 0.3 percentage points since October 2023.
IMF chief economist Pierre-Olivier Gourinchas said most indicators “continue to point to a soft landing,” with global growth steady and “inflation slowing almost as quickly as it rose.”
Inflation a Priority: IMF
“Bringing inflation back to target should remain the priority,” Mr. Gourinchas said. “While inflation trends are encouraging, we are not there yet.”The possibility of the conflict in Gaza spreading into the wider region, along with attacks in the Red Sea and the ongoing war in Ukraine, risk further commodity price spikes.
Other risks include China’s weakened property sector, which could lead to ongoing economic weakness and trouble for trading partners such as Australia.
The IMF expects the Chinese economy to slow from 5.2 percent in 2023 to 4.6 percent in 2024 and 4.1 percent in 2025.
But it says it views the risks to the global outlook as “broadly balanced,” with upside possibilities, including inflation falling faster than expected as participation in the jobs market keeps growing, allowing central banks to start cutting interest rates sooner.
Economic predictions for Australia are little changed from the previous update, with the IMF forecasting a 1.5 percent rise in GDP in 2024 and 2 percent in 2025. In January, it forecast the nation’s economy would expand by 1.4 percent in 2024 and 2.1 percent in 2025.
The IMF forecasts inflation to be at 3.5 percent in 2024 and back to 3 percent—the top of the Reserve Bank of Australia’s target range—by 2025.
The treasurer said inflation in Australia had eased “pretty substantially” and that while that “won’t necessarily continue to come off in a perfectly straight line ... [it] is a fraction of what it was a couple of years ago.”
Mr. Chalmers agreed China’s property sector and the threat of escalation of conflicts in the Middle East and Europe remained key risks.
“My own perspective ... is that we can’t ignore developments in the global economy.”
He is due to travel to Washington later this week for International Monetary Fund, World Bank, and G20 finance minister meetings.
