International Monetary Fund lifts Australian inflation forecast, tips economic growth to slow

Donald Trump’s tariff war will cost the Australian economy $13bn this year, the International Monetary Fund says. The IMF’s major touchstone World Economic Outlook was released on Tuesday night, with the report warning of higher inflation in the Australian economy. The IMF report said while China and the US will cop most of the economic slowdown sparked by the trade tensions, the projections of Australia’s economy have been downgraded.

The local economy is now forecast to grow 1.6 per cent this year, down from a forecast 2.1 per cent.



In 2026, growth is expected to top out at 2.1 per cent, down from 2.2 per cent.

Inflation is expected to reach 2.5 per cent this year, up from a predicted 2 per cent, the IMF says. “At a time of extreme global uncertainty our responsible approach to economic management has never been more important,” Treasurer Jim Chalmers said.

“We’re not immune from the turmoil in the global economy but the progress we’ve made together puts us in good stead.” More to come.