Could Australia be the unlikely winner of the economic shutdown? Nation will take a huge hit from coronavirus - but the rest of the world will be far worse, say top experts
- Australia set to be among world's best performing economies through 2020
- The International Monetary Fund forecasting only a 4.5 per cent drop in GDP
- The predictions are a 2.2 per cent improvement on IMF forecasts from April
- Australia's March quarter one of global 'few exceptions' where output improved
- Treasurer Josh Frydenberg said economy had proved 'remarkably resilient'
- Here’s how to help people impacted by Covid-19
Australia will be one of the strongest economies in the world coming out of the coronavirus crisis, with only a small drop in GDP, according to the International Monetary Fund.
A 6.7 per cent drop in national GDP was forecast back in April, with the global economy taking a $9 trillion hit as a result of the COVID-19 lockdown.
But in revised predictions, the IMF downgraded Australia's GDP fall to just 4.5 per cent this year - less than the 4.9 per cent forecast for the global economy.
This means less job cuts are likely than in other major economies, with fewer people relying on state handouts during a likely worldwide recession.
Australia's March quarter was one of the 'few exceptions' across the world where economic activity improved rather than worsened, the report said.
GDP, or Gross Domestic Product, is the value of all goods and services in a country, and provides an economic snapshot of how healthy a nation's finances are.
Australia is forecast to be among the best performing economies after the crisis (pictured, commuters leave Melbourne's Flinders Street Station wearing masks on Sunday)
Despite the forecast drop in GDP this year, Australia will then bounce back with a four per cent increase in 2021, the IMF's June report said.
Overall, Australia had the best forecast out of the world's advanced economies, with the exception of South Korea which was forecast to have a 2.1 per cent contraction.
Treasurer Josh Frydenberg praised the 2.2 per cent improvement in the IMF's forecast, saying the economy had proved to be 'remarkably resilient in the face of the coronavirus crisis'.
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'There is still a long way to go in recovering from this health and economic crisis,' he said on Wednesday.
'But there are encouraging signs across the economy and we will continue to do all that is necessary to ensure Australia bounces back stronger on the other side.'
The IMF said government wage subsidies should be replaced by public investment and a transition to a low-carbon economy to help pull the global economy out of the pandemic.
The monetary body also recommended an expanded social safety net to be in place for some time, as well as subsidies to businesses to take on workers and more money for training.
Treasurer Josh Frydenberg (pictured, left) with Prime Minister Scott Morrison (right) in Canberra last week. Mr Frydenberg said the Australian economy was 'resilient'
Despite the impact of lockdown on many Australian businesses, including the One Nails Salon in Geelong, Victoria (pictured on June 1), the economy is expected to bounce back in 2021
Federal Treasurer Josh Frydenberg (pictured) will reveal the response to a review of the programs when he hands down an economic statement on July 23
Australia's improved economic forecast comes as the Morrison government considers what to do after its JobKeeper wage subsidies and doubled JobSeeker unemployment payment end in September.
Mr Frydenberg will reveal the response to a review of the programs when he hands down an economic statement on July 23.
Shadow treasurer Jim Chalmers said the IMF's comments highlight the dangers of any 'snapback' in these policies 'which could jeopardise the recovery before it even gets going'.
'Failing to heed the advice of the IMF, the Reserve Bank and others would mean even more Australians are left behind by this government during the first recession in three decades,' he said in a statement.
