On 4 March 2020 the IMF published a report following the conclusion of discussions with Australia under Article IV of the IMF’s articles of agreement.
Economic growth recovered gradually in 2019 with a contribution from net exports. Growth is expected to continue to recover in 2020 but there are still downside risks. The external risks include further trade tensions between the US and China, a tightening of global financial conditions and risks from the recent coronavirus outbreak. There are also domestic risks of weaker consumption if tight labour markets reduce household income. Adverse weather conditions could affect consumption and the tourist industry.
The IMF report welcomed the expansionary fiscal policy in 2019 including tax cuts and additional infrastructure spending. The IMF emphasises the importance of efficient long-term planning, zoning, reform of local government and infrastructure development.
Structural reforms should be implemented to support economic growth focusing on stronger business investment, support for access to finance by small and medium enterprises (SMEs), product market deregulation and targeted tax incentives. Steps should be taken to promote innovation, encourage full-time female employment and decrease youth underemployment. Australia should develop an integrated approach to energy policy and climate change.
