No question mark over the world economy’s gain in momentum: IMF

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Scott Morrison
Australia's Immigration Minister Scott Morrison smiles during an interview with Reuters in Phnom Penh September 26, 2014. Reuters/Samrang Pring

The International Monetary Fund has revealed that global economic recovery is on firmer footing as growth in China, Europe and Japan balance downward revisions for the United States and Britain. Wage growth, however, remains lethargic, which risks growing tensions that have pushed some nations toward more anti-global policies.

“The recovery in global growth that we projected in April is on a firmer footing; there is now no question mark over the world economy’s gain in momentum,” The Australian quotes IMF chief economist Maurice Obstfeld as saying. Presenting the most recent update of the World Economic Outlook (WEO), he explained that latest data points out to the broadest synchronised upswing the world economy underwent in the last decade.

Still, the fund expects the global economy to increase by 3.5 percent this year. It expects up to 3.6 percent growth in the next.

The recent report stresses why Treasurer Scott Morrison and the Reserve Bank are positive about the economic outlook with the IMF lifting forecasts for both China and Japan. Both countries are Australia’s huge trading partners.

As for Australia, there was no particular mention of the nation in the update. The IMF said commodity exporters must continue adjusting to lower revenues while branching out their sources of growth.

Business Council of Australia in plea

The Business Council of Australia has argued that company tax remained the lever available to government to boost a slow growth economy back to the 3 percent-plus levels that would lift employment and wages. The board, in a roundtable interview with The Australian Financial Review, said lifting recession-like levels of business investment was still critical for boosting growth amid intensifying technological disruption and other government intervention in the economy.

The BCA board snubbed claims of a grumpy relationship with the Turnbull government. It suggested that Labor’s intent to work with businesses to create jobs were missing substance.

BCA president Grant King thinks several challenges in policy, in advocacy and community attitudes are a function of lower-growth world. "We've got to get back to growth with a three in front of it,” he added.

He pointed out that if such would be done, several choices will get easier as there would be more to work with. The discussion comes prior to the annual profit reporting season, which is expected to show a significant lift in corporate profits that could aggravate the problems for business.

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