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Australia: 2022 Article IV Consultation-Press Release; and Staff Report

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  • International Monetary Fund

Abstract

The 2022 Article IV Consultation discusses that with a rapid post-pandemic economic recovery and favorable terms of trade, Australia has reached a stronger cyclical position than many other advanced economies, with limited scarring. Inflation has risen to significantly above target, prompting decisive monetary policy tightening. Financial conditions have since tightened, and housing prices started declining from their peak. Australia is on a narrow path to a soft landing. Growth is expected to slow to 1.6 percent in 2023 from 3.6 percent in 2022 as higher interest rates and weaker global growth cut into domestic demand and net exports. Inflation is projected to decelerate slowly toward the 2-3 percent inflation target by the end of 2024. Downside risks to the economic outlook dominate, with significant uncertainty regarding global growth, commodity prices, and domestic developments surrounding wages, housing prices, and the effect of tighter monetary conditions. Structural policies can help foster sustainable, equitable and inclusive growth. The new climate change mitigation targets should be supported with strong policies, while continued structural reform efforts can help address the labor productivity slowdown and achieve greater inclusion.

Suggested Citation

  • International Monetary Fund, 2023. "Australia: 2022 Article IV Consultation-Press Release; and Staff Report," IMF Staff Country Reports 2023/050, International Monetary Fund.
    • Handle: RePEc:imf:imfscr:2023/050
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