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(Australian Associated Press)
Australia’s strong economic growth is likely to continue in the short-term, according to the International Monetary Fund.
But the authority says such growth is facing global risks, including weaker than-expected outcomes in China from its trade tensions with the United States.
In a statement stemming from an official IMF staff visit to Australia, the fund has tipped recent strong growth will continue, as the economy reaches the end of its rebalancing following the mining boom.
A rebound in private business investment unrelated to mining and further growth in public investment is expected to help things along.
That would further reduce slack in the economy, the bank has written, meaning more resources that aren’t being used will be, paving the way for rising wages and prices.
That may sound positive but it’s too soon for Australia to raise its official cash rate from the record low of 1.5 per cent, the IMF said.
“It is not yet the time to withdraw macroeconomic policy support, given remaining slack,” the authority said.
Risks to the nation’s growth include a less favourable global picture, as international protectionism and trade tensions continue.
The local housing market downturn is also risk to growth, but the IMF has welcomed the cooling of the market and its contribution to housing affordability.
Despite that, the authority would like more reforms aimed at improving housing supply, sooner rather than later.
“Planning, zoning, and other reforms affect supply and prices only with long lags, and underlying demand for housing is expected to remain robust,” the bank said.
“Housing supply reforms should, therefore, not be delayed because of the housing market correction.”
Australia has robust regulation of its banks but it could benefit from greater oversight of financial sector risk, according to the IMF.
It has suggested greater transparency of the work of the Council of Financial Regulators in identifying systemic risks in the system and trying to mitigate them.
Financial sector supervision and crisis management arrangement could also be improved, the bank said.