The IMF’s latest World Economic Outlook warns against the premature withdrawal of economic support against a backdrop of weaker growth and unacceptably high unemployment.
Australians can’t afford a slow, jobless recovery caused by a government too eager to rip money out of the economy before the recovery takes hold.
Consistent with the damning expectations outlined in last week’s budget, unemployment is expected to remain too high for too long.
Australia’s economic growth in the recovery is expected to be well below comparable advanced economies in 2021, with forecasts for domestic growth slashed by a full percentage point.
The IMF joins the Reserve Bank, the OECD, Labor and prominent economists that have urged the Morrison Government to put in place policies that create jobs now, build a better future and don’t leave people behind.
According to the IMF:
- The unwinding of measures such as wage subsidies, cash transfers, enhanced unemployment benefits, and credit guarantees for small and medium enterprises should be calibrated to the pace of the recovery and start only after activity picks up durably. Premature scaling back of such lifelines… risks pushing the economy back into recession.
- As fiscal resources are freed from targeted support, some should be redeployed to public investment. Examples include investments in renewable energy, improvements in the efficiency of power transmission, and retrofitting buildings to reduce their carbon footprint
- “Near-term support policies should be designed with a view toward placing economies on paths of stronger, equitable, and sustainable growth”
Scott Morrison’s budget was a missed opportunity to deal with the issues highlighted by the IMF.
Decisions taken by the Liberals in this Budget mean that the Morrison Recession will be deeper and longer than necessary.
WEDNESDAY, 14 OCTOBER 2020