Bloomberg News

IMF Forecasts Backs Surplus Projection: Swan

April 17, 2012

The International Monetary Fund’s forecasts for Australian economic growth are “broadly consistent” with government projections that underpin its plan to return the budget to surplus, Treasurer Wayne Swan said.

Australia’s economic expansion will accelerate to 3 percent this year and 3.5 percent in 2013, the Washington-based IMF said in its World Economic Outlook. Unemployment will remain at the current 5.2 percent this year and next, the report showed.

“These forecasts are broadly consistent with the outlook in” Treasury’s midyear review that has the budget returning to surplus, Swan said in a statement. “With solid growth, low unemployment, contained inflation, strong public finances and a record pipeline of business investment, the Australian economy is the standout performer of the developed world.”

Swan has pledged to end four years of deficits in the fiscal year that begins July 1 as the government attempts to reverse a slump in opinion polls before an election next year. The goal has been threatened by global pressures including slowing economic growth in China, Europe’s debt crisis and elevated unemployment in the U.S.

The IMF predicted inflation in Australia would slow to 2.7 percent this year, within the central bank’s 2 percent to 3 percent target range, before accelerating in 2013.

The central bank said this month that a reduction in interest rates at its May 1 policy meeting hinges on an April 24 report on first-quarter inflation, as recent data indicates the economy is growing slower than earlier predicted. The RBA decided against lowering borrowing costs at its three meetings so far this year as the global recovery stabilizes and a mining boom sustains domestic growth.

To contact the reporter on this story: Brendan Murray in Sydney at brmurray@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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