Australian banks react to IMF gloom
(23 September 2011 – Australia) The International Monetary Fund’s (IMF) latest assessment of the global economy includes world economic growth at just 4 percent, down from its 4.3 percent assessment just three months ago.
The IMF lowered its growth forecasts for the global economy to 4 percent for 2011 and 2012, saying activity had 'weakened significantly,' but warned of a return to recession if Western leaders fail to get their economies back on track.
'The evidence points to continued, uneven growth,' the IMF said in a twice-yearly outlook report.
The global economy, which rebounded in 2010 following the 2008-2009 Great Recession, has been dragged down by persistent debt and deficit problems in the advanced countries, particularly the United States and the eurozone, it said.
For emerging and developing economies, the IMF said that capacity constraints, policy tightening and slowing foreign demand would result in slightly slower growth of 6.1 percent in 2012.
China will continue to lead with a 9.0 percent expansion next year.
Australia was tipped to outperform its rich nations peers, but less so than the IMF forecast in June. Pencil in 1.8 percent this year (down from 3 percent) and growth of 3.3 percent in 2012 (trimmed from 3.5 percent.)
Westpac and ANZ tip the local economy will expand 1.2 percent and 1.3 percent, respectively, in 2011 - well short of the IMF's update. Next year, the two tip 2.5 percent and 3 percent expansion - also shy of the IMF.
Australia's other two big banks, though, say the IMF is selling Australia short by underplaying the speed of the recovery in Queensland's coal exports from devastating floods early in 2011.
National Australia Bank sees local growth coming in at 1.9 percent in 2011 before quickening to 4.1 percent in 2012, as the income boost from the commodities boom filters through the economy.
NAB chief economist Alan Oster said the IMF forecasts numbers for Australia 'looked silly because they underestimated the coal mining' that was coming back on line following the floods.
Commonwealth Bank, too, believes Australia's growth will be above the IMF forecast, ringing up 2 percent for 2011 and then doubling to 4 percent next year.
'Coal production following the floods is the biggest swing factor,' said CBA Chief Currency Strategist Richard Grace. 'We're anticipating it will come back a little bit quicker.'
'The evidence points to continued, uneven growth,' the IMF said in a twice-yearly outlook report.
The global economy, which rebounded in 2010 following the 2008-2009 Great Recession, has been dragged down by persistent debt and deficit problems in the advanced countries, particularly the United States and the eurozone, it said.
For emerging and developing economies, the IMF said that capacity constraints, policy tightening and slowing foreign demand would result in slightly slower growth of 6.1 percent in 2012.
China will continue to lead with a 9.0 percent expansion next year.
Australia was tipped to outperform its rich nations peers, but less so than the IMF forecast in June. Pencil in 1.8 percent this year (down from 3 percent) and growth of 3.3 percent in 2012 (trimmed from 3.5 percent.)
Westpac and ANZ tip the local economy will expand 1.2 percent and 1.3 percent, respectively, in 2011 - well short of the IMF's update. Next year, the two tip 2.5 percent and 3 percent expansion - also shy of the IMF.
Australia's other two big banks, though, say the IMF is selling Australia short by underplaying the speed of the recovery in Queensland's coal exports from devastating floods early in 2011.
National Australia Bank sees local growth coming in at 1.9 percent in 2011 before quickening to 4.1 percent in 2012, as the income boost from the commodities boom filters through the economy.
NAB chief economist Alan Oster said the IMF forecasts numbers for Australia 'looked silly because they underestimated the coal mining' that was coming back on line following the floods.
Commonwealth Bank, too, believes Australia's growth will be above the IMF forecast, ringing up 2 percent for 2011 and then doubling to 4 percent next year.
'Coal production following the floods is the biggest swing factor,' said CBA Chief Currency Strategist Richard Grace. 'We're anticipating it will come back a little bit quicker.'
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