IMF Calls for More Stringent Reforms to Property Taxes in Australia to Avert a Recession

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The International Monetary Fund (IMF) has urged Australian policymakers to introduce tougher property tax reforms, warning that the country is on a “narrow path” toward recession.

Australia’s Economic Growth

Due to its post-pandemic solid recovery and high commodity prices, which largely spared Australia’s economy from damage, the “land down under” is in a better situation than other countries with advanced economies. However, the IMF warned that it has yet to be entirely determined.

“Australia’s economy is on a narrow path to a soft landing, with downside risks,” IMF stated.

The country’s growth is now expected to decline from 3.6 per cent in 2022 to 1.6 per cent in 2023, down slightly from the 1.7 per cent forecast in November, according to the country’s updated growth estimates from the global financial agency.

The IMF claims that the adjustment in growth expectations to the downside was brought on by increasing interest rates and a slowdown in the global economy, which impacted local demand.

IMFacing Uncertain Global Environment

The global environment’s current level of uncertainty, the housing market correction’s impact on demand, and a probable decrease in commodity prices are just a few of the downside risks that endanger the country’s economic prospects.

Due to increased interest rates and lower consumer spending, it also anticipates that unemployment will increase to 4 per cent.

The IMF stated that there is leeway in the central bank’s fiscal policy for future interest rate increases because it anticipates a steady slowdown in inflation toward the Reserve Bank’s 2 to 3 per cent inflation target by the end of 2024.

“With a positive output gap, a tight labour market, and high inflation, further monetary policy tightening, complemented by fiscal consolidation, is warranted,” IMF said.

While the IMF report noted that Australia had made significant progress in recent years, it cautioned against complacency. It argued that policymakers should take steps to ensure the country’s financial system remains strong and resilient.

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