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Australia to weather the storm, says IMF

Date Published : Wednesday, September 24, 2008

Australia's economy is in a healthy enough state to see it make it through the global downturn in one piece.

That is the observation of the International Monetary Fund (IMF), which believes the banking sector in the country has shown sufficient resilience to date to suggest that it will remain unscathed by the turmoil that has been occurring since the sub-prime crisis in the US.

Describing the sector as profitable and well-capitalised, the IMF's Article IV report nevertheless urged cautious monitoring of risk, particularly in relation to the housing market and wholesale funding.

As well as for banks, the IMF also had praise for the government and the Reserve Bank of Australia, hailing fiscal policy and the macroeconomic framework as the backbone of the country's resistance against financial pressures.

Commenting on the findings, federal treasurer Wayne Swan said the IMF was in agreement with the government that the country is not immune to such difficulties but is in "good shape" to deal with them, AAP reports.

"All of that is pretty encouraging, but we understand that there are difficult times ahead," he said.

"We are not out of the woods yet, but it's good to see that the IMF shares our view about the Budget settings and the long term forward agenda for this country.''

He added that it the report was a "strong endorsement" of the country's long-term reform agenda, banking sector and regulatory systems.

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