The International Monetary Fund (IMF) has downgraded its economic growth forecast for Australia in 2027, now predicting real GDP growth of 1.6%. This represents a 0.1 percentage point reduction from its earlier projection.
The IMF's revised outlook, released after annual consultations, suggests a higher likelihood of the Reserve Bank of Australia (RBA) needing to increase interest rates further. This potential tightening of monetary policy is aimed at bringing price pressures under control, as inflation remains a central challenge.
The global financial institution also called on federal and state governments to tighten their budgets. A new report from the IMF stated that more disciplined spending could help manage rising debt burdens and address Australia's ongoing inflation issues.
Concerns about inflation are heightened by rising global energy prices, with Brent crude surpassing $US108 a barrel on Wednesday, marking a 35% surge since early August. Financial markets are currently pricing in an 80% chance of an RBA rate hike on 29 September.