IMF sees Australia risks ’tilted to downside’ on China, trade war – The Age

The balance of risks to Australia’s economy are “tilted to the downside” due to a deteriorating global outlook, the International Monetary Fund said, urging the central bank to keep interest rates low.

In the concluding statement to its Article IV mission, the IMF said Australia’s economic expansion was expected to continue, further reducing slack in the economy and paving the way for “gradual upward pressure” on wages and prices. It welcomed the cooling of the housing market against a backdrop of strong growth, but warned that larger forces could buffet the economy.

The IMF welcomed the cooling of the housing market against a backdrop of strong growth, but warned that larger forces could buffet the economy.

The IMF welcomed the cooling of the housing market against a backdrop of strong growth, but warned that larger forces could buffet the economy.Credit:Louie Douvis

“A weaker than expected near-term outlook in China, coupled with further rising global protectionism and trade tensions could delay full closure of the output gap,” the IMF said.

“A sharp tightening of global financial conditions could spill over into domestic financial markets, raising funding costs and lowering disposable income of debtors, with the impact also depending on the response of the Australian dollar.”

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