Australia: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Australia

International Monetary Fund

No 2019/055, IMF Staff Country Reports from International Monetary Fund

Abstract: This Article IV Consultation highlights that Australia experienced only a minor downturn after the end of the mining investment and commodity price boom but, as elsewhere, the adjustment and rebalancing has been slow, with below-target inflation and low wage growth amid economic slack. Macro-financial vulnerabilities relating to high household debt and low housing affordability have become major concerns after a recent housing boom. The baseline forecasts entail a soft landing in the housing market, but a stronger market correction remains a risk. Overall, near-term risks to growth are to the downside, mirroring the global risk picture, with the impact of shocks potentially being amplified by high household debt. The IMF staff welcomes the authorities’ continued commitment to working actively with international partners to promote the global multilateral trading system. Macroeconomic policy support should remain in place until full employment and inflation in the target range are firmly within reach. The structural policy agenda appropriately targets innovation, infrastructure gaps, tax reform, and energy policy, although progress has been limited in some areas.

Keywords: ISCR; CR; state; monetary policy; government; housing market; ABS implementation; liability positions vis-à-vis nonresident; housing market correction; child care policy initiative; trend estimate; Housing prices; Housing; Labor markets; Infrastructure; Inflation; Global; Asia and Pacific (search for similar items in EconPapers)
Pages: 69
Date: 2019-02-21
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