IMF annual report strikes upbeat note on Australia

The International Monetary Fund (IMF), in its annual report released today, struck an upbeat note on Australia. According to the IMF, the economy remained in a favourable position, with growth predictions at around 3.25 per cent this year, broadly in line with the trend growth.

According to treasurer Wayne Swan, the IMF had given the government's economic management "another big tick" during the most challenging period of global volatility in three quarters of a century.

"The government understands that not everyone is doing it easy, but reports like these demonstrate why all Australians can be proud of what we have achieved working together in the face of acute global challenges," Swan said in a statement.

However, the report - the 2012 IMF Article IV Staff Report and Financial Sector Assessment Program - warned that because growth was mining investment boom driven it increased economy's "vulnerability to terms of trade shocks".

Meanwhile, uncertain global environment, a high Australian dollar and sluggish housing construction meant investment outside of mining would also likely remain weak in the near term. However, the IMF said the Reserve Bank of Australia (RBA) was in a position to respond to near-term shocks.

"The RBA has the scope to lower interest rates and loosen monetary conditions to buffer against a downside scenario," it says.