The Australian economy will continue to struggle at a slow growth pace to remove pressure from the rising unemployment rate which is currently on its ten-year high. In the latest regional report, the International Monetary Fund (IMF) expects the country's economy to grow below the trend.
The IMF has downgraded its growth forecast for Australia since October 2013 from 2.6 per cent to in 2014 to 2.7 per cent in 2015. The Washington-based institution has previously expected Australia's economy to grow between 2.8 and 2.9 per cent.
The IMF said Australia's economy is expected to grow below the trend since investments in the mining boom have reached its peak and is now on a declining phase. In the agency's regional report, Regional Economic Outlook for Asia and Pacific released in HongKong on April 28, the IMF said Australia's economy will need to grow above three per cent every year to keep unemployment rates from rising further.
Australia's Treasurer Joe Hockey has previously pledged that his budget on May 13 will not block the country's tentative signs of economic recovery. He suggested that budget cuts might happen in the coming years as part of a 10-year plan.
In contrast with Australia, New Zealand's growth forecasts in the past six months continue to increase due to strong exports, post-earthquake reconstruction and export growth.
The IMF has upgraded its economic growth forecasts for New Zealand in the last six months. The agency expects the New Zealand economy to grow at 3.3 per cent in 2014 and three per cent in 2015. The previous growth forecast was at 2.4 per cent.
According to the IMF report, Asia is expected to experience strong growth in 2014 and 2015 to be among the company of global growth leaders. The Asian region is expected to benefit from improved growth opportunities among the world's advanced economies.
However, global economies continue to face new and old risks including the ongoing geopolitical uncertainty over Ukraine, the tapering or the moving away from the unconventional monetary U.S. policy and the impact of low inflation in the EU.