IMF forecasts Australia among developed world's worst inflation
A new IMF report puts Australia on track for one of the highest inflation rates in the developed world, as Josh Frydenberg weighs a political comeback.
Australia is on track to record one of the highest inflation rates in the developed world, according to a new report from the International Monetary Fund released on Wednesday, delivering unwelcome news for the Albanese government.
Economists say the higher inflation is what sets Australia apart from comparable advanced economies. The IMF expects inflation to ease to 3.1 per cent next year, but that would still sit above the Reserve Bank's target band.
The forecasts for the broader economy are also soft. The unemployment rate is tipped to climb to 4.7 per cent next year, while GDP growth is projected to slow further to 1.6 per cent.
Treasurer Jim Chalmers addressed the report during Question Time in Parliament. He said it made three key points: that the global outlook is fragile, that global supply shocks are becoming more frequent, and that the war in the Middle East is evidence of this. He added that the conflict is pushing inflation higher around the world.
Frydenberg keeps comeback door open
Separately, speculation has grown over a political return for former Liberal Treasurer Josh Frydenberg. He told Sunrise that he will decide next year whether to run for federal politics.
Frydenberg was in Sydney to launch his book alongside former prime minister John Howard. Speaking from outside the Parliament, he said he wanted to sound the alarm and push for a course correction in the country's direction.
He said he was worried about where the country is heading, which is why he had set out in writing some of the important reforms he believes Australia needs to adopt.
The Opposition Leader has been making a similar argument, telling the Coalition party room that they are fighting for the soul of the country. Frydenberg is understood not to have been a topic of discussion at that meeting.
Labor, however, seized on the moment. Government figures described what they called a public audition by Frydenberg, the opposition leader in waiting, and made light of his reappearance in the political conversation.
Frydenberg lost his inner Melbourne seat two elections ago, and winning it back would be a considerable task. Parliament also had a lighter moment on the same day, with Barnaby Joyce and Matt Canavan on the losing side of a State of Origin friendly held at Parliament House in the morning.
For now, the IMF's outlook adds pressure on the government to show it has a credible plan to bring prices under control, while the Opposition looks to capitalise on economic anxiety.
Key questions
- What did the IMF say about Australian inflation?
- The IMF said Australia is on track for one of the highest inflation rates in the developed world, forecasting it to ease to 3.1 per cent next year, which is still above the RBA's target band.
- What does the IMF expect for unemployment and growth?
- The IMF tipped unemployment to rise to 4.7 per cent next year, while GDP growth is expected to slow further to 1.6 per cent.
- Is Josh Frydenberg returning to politics?
- Frydenberg told Sunrise he will make a decision next year on whether to run for federal politics. He lost his inner Melbourne seat two elections ago.