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2017.11.2003:08:00UTC+00Australia Economy Seen to Expand at Moderate Pace - IMF

The economy of Australia is expected to accelerate at a “modest” pace as soft wage growth is seen to add pressure on consumption, according to the International Monetary Fund.

The IMF said that interest rates in Australia were “appropriately accommodative.”

The Reserve Bank of Australia kept rates at a record low 1.50 percent for over a year now with core inflation below its 2-3 percent target band for two full years.

“With stronger momentum in domestic demand and inflation close to the mid-point of the target range not yet secured, continued macroeconomic policy support will remain essential,” as stated in the IMF report.

The IMF expects Australia's A$1.7 trillion ($1.3 trillion) economy to grow at “above-trend rates” due to infrastructure spending by the government.

The boost from infrastructure will have a positive impact on private investment and could also counterbalance the declining contribution from residential investment.

According to the report, there is an opportunity to expand on infrastructure spending, beyond the government's existing projects.

“Near-term risks to growth have become more balanced, but large external shocks, including their interaction with the domestic housing market, are an important downside risk. On the positive side, the improved global outlook could lead to a stronger-than-expected recovery, underpinned by a larger pickup in non-mining business investment.”

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