IMF sees dangers

Australia is expected to lag behind its peers in reducing inflation and boosting economic growth, the International Monetary Fund has warned, as Treasurer Jim Chalmers prepares to attend a series of high-level talks in Washington.

With less than a month until the May budget, Dr Chalmers will leave the country on Thursday to attend meetings with his counterparts at the G20, IMF and World Bank, as a slowdown in China, escalating tensions in the Middle East and the prospect of delayed interest rate cuts weigh on the global economy.

“These evolving global conditions make it an important time to engage with my counterparts and international institutions as we put the final touches on the May Budget,” Dr Chalmers said on Tuesday ahead of his trip.

In its latest World Economic Outlook, also released on Tuesday, the IMF forecast that average headline inflation in Australia would ease to 3.5 per cent in 2024, down from its October projection of 4 per cent.

But consumer price growth would still be 3 per cent on average through 2025, the projections showed, at the top of the RBA’s 2 to 3 per cent target band.