The IMF's September World Economic Outlook (WEO) confirms our fundamentals remain strong with the Australian economy expected to grow faster than all major advanced economies next year, despite increased global instability.
The IMF has issued a stark warning for the global economy, highlighting that it has entered a dangerous new phase. Global activity has weakened and has become more unbalanced. Downside risks are also intensifying.
Reflecting developments in advanced economies, the IMF has downgraded its global growth forecasts, projecting world GDP to grow 4.0 per cent in 2011, down from 4.3 per cent in its June update. The IMF's global growth forecast for 2012 has also been revised down from 4.5 per cent to 4.0 per cent.
The recovery continues to be led by Asia, particularly China and India, which are forecast to grow by 9.5 per cent and 7.8 per cent respectively in 2011, and 9.0 per cent and 7.5 per cent respectively in 2012.
The IMF's forecasts confirm that the Australian economy has strong fundamentals and is well positioned to benefit from growth in our region.
Despite suffering the most costly natural disasters in our history, and ongoing global instability the IMF forecasts that the Australian economy will grow by 3.3 per cent in 2012, which far exceeds its forecast for advanced economies as a whole (1.9 per cent in 2012).
Australia's positive economic growth outlook, low unemployment, enviable public finances and unprecedented pipeline of business investment mean that our economy is well positioned to ride out the instability that we're seeing abroad.
The IMF's September Fiscal Monitor also provides another endorsement of Australia's strong fiscal position, which remains the envy of the developed world.
The report cautions that global fiscal risks remain very high, particularly in regions like the euro area, the United States and Japan.
In stark contrast, Australia has strong public finances, low debt and has a clear plan to return the budget to surplus in 2012-13, well ahead of all major advanced economies.
This is a testament to the clear and credible fiscal strategy which the Government has been methodically implementing from day one. This strategy - which has been repeatedly endorsed by the IMF - will ensure that as we go forward our public finances will continue to be amongst the best in the developed world.
The global outlook as outlined by the IMF raises the stakes for major economies to take credible and swift action to address economic problems. Nations need to work together to tackle this economic volatility with the same determination that saw us stare down the global financial crisis.
I will work with my counterparts on these very important issues at the G20 Finance Ministers' Meeting and the IMF and World Bank meetings I will be attending this weekend in Washington DC.
21 September 2011