Australian Treasurer Wayne Swan yesterday urged European nations to “get their act together” as the International Monetary Fund released dire new predictions for the global economy.
Named the world’s best Finance Minister by Euromoney magazine overnight due to Australia’s recession-beating performance during the financial crisis, Swan said he would deliver a blunt warning at coming global meetings.
“When I go to the G20, IMF (and) World Bank meetings in Washington later this week I will certainly be making the point that it’s very important that the Europeans get their act together,” he told ABC radio.
“There’s no doubt that political inaction lies at the core of this challenge, both in Europe and the United States. What you’re seeing in both areas, really, is political gridlock.”
Swan also stressed the strength of Australia’s economic fundamentals after the IMF slashed growth forecasts for the mining-powered nation from three per cent to 1.8 per cent as it warned of a “dangerous new phase” for the world economy.
Australia’s Central Bank expects growth of 3.25 per cent for 2011, while the government has flagged a more modest 2.25 per cent.
“The reason it is down a bit for Australia is very simple – the floods earlier this year and the cyclones earlier this year had a dramatic impact on our economy,” Swan said of the IMF downgrade.
“But if you go further into the IMF report they say that we’re going to grow faster than any major advanced economy and they give a ringing endorsement to the underlying strengths of the Australian economy.”
Australia grew 1.2 per cent in the June quarter, rebounding from a 0.9 per cent contraction in the first three months of 2011 due to wild weather in key mining and farming areas.
Analysts said the growth was patchy and the economy seemed to have lost momentum even before global conditions started to deteriorate, with the relatively high 4.75 per cent interest rate tempering consumer activity.
The Australian dollar’s year-long march at or above parity with the US dollar was also dampening growth, hitting trade-exposed industries such as manufacturing and tourism.
The IMF warned Tuesday that Western economies could return to recession, slashing forecasts for the United States and the Eurozone and predicting global growth for 2011 and 2012 of four per cent.