It forecast further cuts in the global growth forecast for 2019 and 2020, which were already revised down as recently as October.
The global economy is projected to grow at 3.5 per cent this year and 3.6 per cent in 2020, 0.2 and 0.1 percentage point below last year’s projections.
“Overall, the cyclical forces that propelled broad-based global growth since the second half of 2017 may be weakening somewhat faster than we expected in October,” IMF counsellor Professor Gita Gopinath told leaders at the World Economic forum in Davos overnight.
“While this does not mean we are staring at a major downturn, it is important to take stock of the many rising risks.”
Senator Birmingham said an immediate priority was to ensure that Australian firms were well-positioned to navigate both the risks and opportunities of a post-Brexit world.
“Our message remains the same as since the referendum result was announced – the second Britain is ready, Australia stands ready to launch formal negotiations for an Australia-UK free trade agreement,” he said.
“We should show the world how quickly yet effectively it can be negotiated, seeking to conclude and sign as rapidly as we can after March 29, and entry into force occurring as soon as possible thereafter.”
In the absence of a Brexit or US-China trade breakthrough, the IMF said measures to boost growth and strengthen fiscal and financial buffers in an environment of high debt and tighter financial conditions were imperatives.
Prime Minister Scott Morrison has become increasingly concerned by economic headwinds in recent weeks, but has tried to avoid talking the economy down while painting Labor as a risk to its future momentum.
In a speech to the Sydney Institute on Tuesday, Treasurer Josh Frydenberg will say that the Coalition will “navigate the currents ahead” with its economic plan that focuses on “growth, aspiration and budget repair”.
“As the Prime Minister has warned, there are storm clouds hanging over the global economy. Persistent trade tensions, high global debt levels and a contraction in growth in several key economies has changed the global outlook,” he will say.
“The strength of Australia’s economy provides the resilience and flexibility to respond to challenges as they arise.”
December’s national accounts showed at 2.8 per cent Australia was growing faster than any G7 country, except the United States.
Shadow treasurer Chris Bowen said Labor had listened to the IMF’s warning.
“Labor is the only major party with economic and tax policies designed to restore the fiscal buffers and pay down debt in a fair way,” he said.
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.
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