Australia Market

Australian economy leads the world

Australia has the strongest economy in the developed world and it is expected to outperform all comers for at least the next two years, according to the International Monetary Fund. The Treasurer, Wayne Swan, said this update is consistent with the reasons he has given for bringing the budget back to surplus, and criticized Tony Abbott for "talking down the economy".

The IMF - which issued its World Economic Outlook in Washington overnight - said it expected the Australian economy to expand by 3 per cent this year as fiscal tensions from Europe and the United States continue to ease. The body stated that after a major setback last year with the Eurozone crisis, the global prospect of far more stable financial conditions was gradually improving.

The update said that it expects the Australian economy will outstrip growth over all other advanced economies over the next two years, noting we live in a region where exposure to troubled European banks was less than for other parts of the world. But it also warned that Australia was exposed to risk if economic conditions in the Middle East caused another oil price spike.

The organization revised up its global growth forecasts, with the global economy expected to grow by 3.5 per cent in 2012, up from 3.3 per cent in the January update.

A forecast of global growth of 4.1 per cent in 2013 has also been revised up from 3.9 per cent. Global growth continues to be underpinned by solid growth in Asia, the report said. China's economy was expected to grow 8.2 per cent in 2012 and 8.8 per cent in 2013, while India was expected to grow 6.9 per cent in 2012 and 7.3 per cent in 2013. These forecasts were broadly unchanged from the IMF's January update.