Australia’s economy won’t grow as rapidly as expected next year, mirroring a broader global economic slowdown, according to the International Monetary Fund (IMF).
In its latest World Economic Outlook report, the IMF cut the growth forecast for Australia’s economy in 2013 by 0.5 per cent, reducing it to three per cent. GDP growth this year is expected to top 3.3 per cent, well up on the 2.1 per cent increase recorded in 2011.
Australia’s unemployment rate is expected to creep forward to 5.3 per cent by 2013, the IMF added, up from 5.1 per cent in August.
The IMF said the prospects for the global economy “have deteriorated further and risks increased”.
Overall, the IMF’s forecast for global growth was cut to 3.3 per cent this year, and what it termed “a still sluggish” 3.6 per cent in 2013.
The IMF said advanced economies are projected to grow by 1.3 per cent this year, compared with 1.6 per cent last year and 3.0 per cent in 2010, with public spending cutbacks and the still-weak financial system weighing on prospects.
“Growth in emerging market and developing economies was marked down compared with forecasts in July and April to 5.3 per cent, against 6.2 per cent last year,” the IMF said.
The IMF said that leading emerging markets such as China, India, Russia, and Brazil will all see slower growth. Growth in the volume of world trade is projected to drop to 3.2 per cent this year, down from 5.8 per cent last year and 12.6 per cent in 2010.
“Low growth and uncertainty in advanced economies are affecting emerging market and developing economies through both trade and financial channels, adding to homegrown weaknesses,” said IMF chief economist Olivier Blanchard.