Run for your life: IMF upgrades Australia

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Via Peter Martin:

The May budget is set to forecast a surge in economic growth, much lower unemployment and a rebound in inflation, according to a ‘sneak preview’ released by the International Monetary Fund Wednesday morning in Washington.

The Fund’s updated forecasts for Australia contained in its annual World Economic Outlook are much more upbeat than those in its special survey of Australia released in February.

…They show economic growth of 3.1 per cent in 2017 followed by 3 per cent in 2018. In February the IMF was forecasting 2.6 and 3 per cent.

…The most recent official forecast in the December budget update was for 2 per cent in 2016-17 followed by 2.75 per cent in 2017-18.

…Australia’s unemployment rate is set to plunge from 5.9 per cent to 5.2 per cent, well below the 5.5 per cent forecast in the December budget update.
Inflation is expected to climb from the present uncomfortably low rate of 1.5 per cent to 2 per cent this year and 2.6 per cent in 2018.

If replicated in the May budget the forecasts would boost revenue and allow the government to continue to forecast a return to surplus by 2020-21.

If true, that is the end of AAA rating when the MYEFO destroys this foolish optimism at year end.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.