Economic outlook bleak:IMF

The IMF is talking about a deepening global recession with severe consequences.

And Australia won’t escape.

It is expected to contract by 1.4 per cent this year, before growing by just 0.6 per cent next year.

But the Treasurer Wayne Swan says that is, at least, a better outcome than most developed countries can expect.

“This is a much milder contraction than expected in almost every other advanced economy,” he says.

Developed countries, combined, are expected to contract by 3.8 per cent this year.

In short, the world is facing its worst economic performance in post war years.

Mr Swan says Australia’s unemployment is now likely to be closer to 8 per cent, at the end of this year, than the 7 per cent he originally forecast.

“The IMF notes,” he says,” that the global economy is in a severe recessison.”

And it says that, in turn, has been inflicted by “a massive financial crisis” and “an acute lack of confidence.”

We knew all that, of course.

But it is still disturbing to hear forecasts like this made official.

Especially as the IMF’s latest forecasts are its fifth downgrading in just six months.

This situation will have severe consequences for us all.

And many of those will become apparent, when Mr Swan brings his latest budget into parliament on May 12.

His boss, Kevin Rudd, has already revealed that this will be yet another stimulatory document.

But that doesn’t exclude bad news.

Expect it.