FED:Swan uses IMF report to talk up economy

AAP General News (Australia)
08-07-2011
FED:Swan uses IMF report to talk up economy

CANBERRA, Aug 7 AAP - Federal Treasurer Wayne Swan has seized on an International Monetary
Fund (IMF) report to further talk up the Australian economy following a rough week for
financial markets worldwide.

Australian stocks are tipped to be punished again on Monday after the US's credit rating
over the weekend was downgraded for the first time in its history.

But Mr Swan insists Labor's "fiscal responsibility", which the IMF praised, means Australia
has the flexibility needed to deal with surprises.

"I'm not going to sugar-coat the fact that the global economic outlook remains uncertain
and this uncertainty is likely to continue for some time," the treasurer said in his weekly
economic note.

"(But) as the IMF points out, Australia is well positioned to respond to future challenges."

Mr Swan acknowledged there were "soft spots" in the Australian economy such as the
higher dollar and cautious consumers.

These challenges were making things tough for retailers, the tourism sector and manufacturers,
he said.

"But it's important to remember, as the IMF statement shows, that Australia faces the
challenges from a position of strength," Mr Swan said.

The IMF report endorses the government's economic management and supports Labor's plan
to price carbon.

Australia's economic outlook is favourable largely due to strong demand for commodities
and investment in mining, the fund says.

But it warns there could be a risk of global recovery stalling or Asian growth slowing
which could impact on the demand for Australian resources.

In its report, the IMF commends the government for remaining committed to returning
the budget to surplus by 2012-13 despite the setbacks posed by natural disasters last
summer.

"This consolidation is faster than in many other advanced economies and is more ambitious
than earlier envisaged," the IMF says.

But opposition frontbencher Malcolm Turnbull argues that confidence in the Australian
economy is being undermined by a sense that the Gillard government isn't competent.

There's a perception in the community that Australia is run by a "dysfunctional and
chaotic" government, Mr Turnbull told Sky News on Sunday.

"There's a sense that there is not a steady pair of hands on the wheel and that is
what rattles the business community," he said.

"Whatever you think of the government's policies there is a perception that there is
a lack of competence and of course a lack of conviction."

The Australian sharemarket slumped by four per cent on Friday to its biggest one-day
loss since the height of the global financial crisis almost three years ago.

AAP jcd/mp

KEYWORD: ECONOMY WRAP

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