Australia has been caught up in a sharp downturn being forecast for the global economy as headwinds from the US-China trade war and Brexit tensions bite into growth.
The International Monetary Fund is predicting a “synchronised slowdown” with global growth in 2019 downgraded once again to 3 per cent — noting a “serious climbdown” from 3.8 percent in 2017.
The slowest pace of growth since the global financial crisis is being blamed on rising trade barriers and higher uncertainty from swirling geopolitical issues, which are putting a dent in manufacturing and global trade.
In its latest World Economic Outlook, the IMF says Australia’s economy will weaken to 1.7 per cent growth in 2019, down a full percentage point from 2.7 percent in 2018.
In a statement reacting to the gloomy outlook, Treasurer Josh Frydenberg confirmed that while the fundamentals of the Australian economy remain sound, “we do face headwinds”.
“We have a AAA credit rating, record labour market participation and welfare dependency at its lowest level in three decades. We are in our 29th year of consecutive economic growth — a record unmatched by any other developed nation,” Mr Frydenberg said.
“But the international challenges are a stark reminder of why we must stick to our economic plan which will deliver lower taxes so Australians can keep more of what they earn, more infrastructure to create jobs and boost productivity.”