International Monetary Fund. Asia and Pacific Dept
1. Australia entered the pandemic with sound macroeconomic fundamentals but growth below potential. Mining investment had stabilized following years of adjustment after the mining boom, and housing prices had just started rising following the 2017–19 decline. The economy was supported by sound macroeconomic management, including prudent fiscal policy, an inflation targeting framework, and exchange rate flexibility. However, growth remained below potential, and inflation undershot the Reserve Bank of Australia’s (RBA) target range. Despite generally strong fundamentals with low government debt and a well-capitalized banking sector, some structural vulnerabilities remained. These included slowing labor productivity growth, high household debt, and elevated banking sector loan concentration in residential mortgages.
International Monetary Fund. Communications Department
IT’S EASY TO SEE the failures of modern capitalism in the rise of inequality, post-financial-crisis stagnation, and inadequate responses to climate change and now COVID-19. Polarized political parties offer a choice only between different visions of a stronger state. And almost everyone seems to agree that now is a good time to beat up on the tech giants.
The global recovery continues but the momentum has weakened, hobbled by the pandemic. Fueled by the highly transmissible Delta variant, the recorded global COVID-19 death toll has risen close to 5 million and health risks abound, holding back a full return to normalcy. Pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries. Overall, risks to economic prospects have increased, and policy trade-offs have become more complex.