On 18 January 2024 the IMF issued a report following discussions with Australia under Article IV of the IMF’s articles of agreement.

The report noted that although Australia’s post-pandemic recovery was strong, tighter macroeconomic policies and financial conditions were currently weakening economic growth. The economy remains resilient in the near term but is facing a slowdown in productivity growth. Economic activity is estimated to slow further in the near term, with tightening of monetary conditions. Economic growth is expected to be around 1.8% for 2023 and to decrease to 1.4% in 2024. The economy could be further slowed by slowing private consumption resulting from higher interest rates and lower real wages.

The IMF report recommended reforms to promote productivity growth and the green transition. The report noted that a comprehensive tax reform would help the economy and emphasised the need to rebalance the tax system from direct to indirect taxes, while addressing regressive impacts. The report noted that measures have been taken to contain spending growth and noted the importance of support for vulnerable social groups.

The IMF report noted the recent measures taken to tackle skill shortages and improve the labour market. The need for further reforms to promote productivity growth and inclusion was emphasised. The IMF welcomed Australia’s continued support for multilateral institutions and an open trade environment.

As noted in the report, Australia has made efforts to meet its climate mitigation targets; but meeting the 2030 climate target will be challenging. The IMF suggested that the government should consider making additional efforts to achieve the net zero emission target by 2050. The focus on developing sectoral decarbonization plans was welcomed.