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IMF forecasts Australia to post steepest unemployment rise in the developed world

Jobless rate tipped to climb to 4.7 per cent in 2027 even as Australia remains one of the fastest-growing economies

By LineZotpaper
Published
Updated
Read Time2 min
Sources4 outlets
The International Monetary Fund has forecast Australia will record the biggest unemployment increase of any developed nation, with the jobless rate climbing 0.3 percentage points to 4.7 per cent in 2027, even as the economy remains among the fastest-growing in the world.

In its six-monthly World Economic Outlook, released on Tuesday, the fund tipped Australia's economy to grow 1.9 per cent this year and 1.6 per cent in 2027, a pace exceeded only by the US, Spain, Singapore and New Zealand.

At that level of growth, unemployment is forecast to rise from 4.4 per cent this year to 4.7 per cent in 2027. Almost all other developed nations are expected to see no change or a small fall in unemployment over the same period. The number of Australians out of work could approach 800,000 by 2027, according to the forecasts.

Both growth forecasts are 0.1 of a percentage point lower than the fund's April projections.

Globally, the IMF expects the world economy to expand 3.1 per cent this year before accelerating to 3.4 per cent in 2027. Global inflation is expected to hit 4.7 per cent this year, driven largely by a surge in commodity prices including oil and food, before easing to 4.1 per cent.

The fund warned that the good luck that helped the world economy ride out the turmoil caused by the US-Israel war against Iran could soon run out, naming the AI boom and soaring government debt as growing risks to all nations.

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Analysis

Why This Matters

  • Australia is forecast to post the largest unemployment rise in the developed world even though its growth is among the fastest, an unusual divergence that will test how well headline growth translates into jobs.
  • The IMF has named the AI boom and rising government debt as risks to all nations, putting the durability of the current global expansion into question.
  • A rise to 4.7 per cent would put close to 800,000 Australians out of work by 2027, with direct effects on households and the federal budget.

Background

The IMF publishes its World Economic Outlook twice a year, in April and October. This October edition trims the fund's April forecasts for Australia by 0.1 percentage point in each of the two years, after an April report that warned of growing recession risks and cautioned governments against fuelling war-driven inflation. Australia's unemployment rate has been low by the standards of recent decades, and the forecast rise to 4.7 per cent marks a notable shift, set against a global backdrop of commodity-driven inflation and conflict in the Middle East.

Key Perspectives

The IMF: Sees Australia expanding faster than almost all advanced peers, but forecasts its unemployment will climb by more than any other developed country, and warns the AI boom and soaring government debt are emerging risks for every nation. Australian policymakers: The downgraded growth forecasts for this year and next, combined with rising jobless numbers, leave the government managing a labour market slowdown even as the economy outperforms most of the developed world. Sceptics: The divergence between Australia's strong growth and its weak jobs outlook is unusual, and the IMF's warning that the good luck supporting the world economy could run out raises the risk that the unemployment forecast proves optimistic rather than pessimistic.

What to Watch

  • Official Australian labour force figures in the months ahead, to test whether unemployment is tracking the IMF's path toward 4.7 per cent.
  • Global oil and food prices, which the fund says are driving this year's surge in inflation.
  • The IMF's next World Economic Outlook in April 2027, and whether the AI boom and government debt levels force further revisions.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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