IMF lauds 'enviable' Aussie economy
By
Adam Smith
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10/10/2011 3:00:00 AM
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The International Monetary Fund has called Australia's economic performance "enviable", but warned that the RBA may need to further tighten rates to fight inflation.
In an assessment of the Australian economy, the IMF noted Australia's "enviable" performance since the onset of the GFC. It commented that Australia's economic resilience was largely due to government stimulus, a healthy banking system, a flexible exchange rate and good demand for commodities. However, the IMF also pointed out economic risks that could erode GDP growth.
"Key downside risks are that the global recovery stalls or Asian growth falters, impacting demand for commodities. Funding markets could also be disrupted by concerns about sovereign debt in advanced economies," the organisation said.
The group also warned that further cash rate tightening could be required if Australia's economy remains on track. While the RBA Board's recent Statement on Monetary policy left open the possibility of rate cuts, the IMF warned that inflationary pressures could arise from "the unprecedented increase in mining investment".
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