Treasurer Josh Frydenberg says economic kickstart off the menu
Treasurer Josh Frydenberg, who is set to attend financial meetings in Washington this week, has said the government must stick to its economic plan and not provide a stimulus package.
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Josh Frydenberg is resisting calls by the International Monetary Fund for the federal government to provide a stimulus package to kickstart the economy.
The Treasurer, who flew out of Canberra on Wednesday for financial meetings including with the IMF in Washington, acknowledged global economic challenges but said it was important the government stuck to its economic plan.
This week the IMF released its World Economic Outlook, predicting Australia’s growth would fall from 2.1 to 1.7 per cent. It put pressure on the government to consider stimulating the economy, saying “monetary policy … should be coupled with fiscal support where space is available.’’
Mr Frydenberg said Australia was experiencing its 29th year of economic growth, and the IMF had forecast Australia’s economy to grow faster than any G7 economy except the US.
But he acknowledged “headwinds’’ including trade uncertainty and the drought, adding: “The international challenges are a stark reminder of why we must stick to our economic plan.”
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With recent RBA cuts taking Australia to record low interest rates, the government has little room to move on fiscal policy without putting a planned surplus in jeopardy, a move that would be politically disastrous.
Labor’s Treasury spokesman Jim Chalmers said Mr Frydenberg and Prime Minister Scott Morrison had no plan to turn the economy around.
“These new (IMF) numbers torpedo what was left of the government’s economic credibility,’’ Mr Chalmers said. “The IMF is ringing the alarm bells on our economy, but Morrison and Frydenberg are too out of touch to hear them.”