The Australian economy’s growth has been forecast to increase more than was first predicted for 2021. The International Monetary Fund (IMF) updated its 2021 global economic growth forecast yesterday. It has increased Australia’s expected GDP growth to 4.5%.
This means Australia could recover from the pandemic-spurred economic downturn this year, after GDP shrunk by 2.4% in 2020.
Beyond Australia, the global economy is projected to grow 6% in 2021.
IMF’s prediction of the Australian economy’s future
Australia’s economy looks like it could be steadying after a turbulent 2020.
At the time of writing, the S&P/ASX 200 (ASX: XJO) has bounced 31.1% since this time last year.
The Reserve Bank of Australia is still holding the official cash rate at 0.1%. It’s not expected to be lifted until at least late 2023.
According to the Sydney Morning Herald, RBA’s governor Philip Lowe has said it won’t increase interest rates until inflation was between 2% and 3%. The IMF predicts Australia will reach 2% inflation in 2024.
Future IMF predictions state Australia’s GPD growth may slow in the coming years. It’s estimated our GPD growth will be 2.8% in 2022, 2.3% in 2023 and 2.2% in 2024.
For comparison, between 2013 and 2019 Australia’s GDP growth stayed between 2.1% and 2.8%.
Simultaneously, our housing prices are increasing exponentially. Motley Fool Australia’s Scott Phillips spoke of Australia’s increasing house prices on Sky News First Edition yesterday.
Global growth forecast
The IMF predicts the economies that suffer most in the coming years will be those of low-income nations.
It also predicts the global economy will grow by 6% in 2021, seemingly led by those hit hardest by the coronavirus pandemic.
India is among the economies the IMF forecasted would have the highest growth in 2021. It is predicted to grow by 12.5%, recovering from its drop of 8% in 2020.
The United Kingdom’s GDP is predicted to bounce back from its 5.3% drop in 2020 to grow by 9.9% in 2021.
The United States’ economy wasn’t hit as hard as others in 2020. Its GDP is predicted to overcome its 3.5% fall by rising 6.4% in 2021.
Finally, China’s GDP saw a drop similar to Australia’s in 2020, falling by 2.3%. Though, the IMF predicts it will experience an 8.4% growth in 2021.