Financial organisation says only the Philippines likely to fare worse over the next two years

This article is more than 5 years old

This article is more than 5 years old

The International Monetary Fund (IMF) expects Australia to have the worst jobless rate in the Asia-Pacific region bar the Philippines over the next two years.

The IMF is predicting a rate of 6.2% in 2014 and 6.1% for 2015. Only the Philippines is higher in the region, with respective rates of 6.9% and 6.8%.

Australia’s labour force numbers have been volatile in recent months with the unemployment rate swinging between a 12-year high of 6.4% and 6.1%.

Economists expect Thursday’s jobs figure for September to show an unemployment rate of 6.2%.

More broadly, the IMF has made a modest upgrade to Australia’s growth forecasts in its latest world economic outlook, released in Washington on Tuesday, compared with those made in April.

The IMF expects Australia to grow 2.8% in 2014 and 2.9% in 2015, but still below its long-term average of about 3.25% and a level needed to help increase employment. It sees a pick-up in exports offsetting waning mining investment.

However, it has nudged down its last forecast for world growth to 3.3% in 2014 and to 3.8% in 2015.

The IMF’s chief economist, Olivier Blanchard, described the world economy as being in the middle of a balancing act.

On one hand, countries must address the legacies of the global financial crisis, ranging from debt to high unemployment. “On the other, they face a cloudy future,” Blanchard said in the report.

“Potential growth rates are being revised downward, and these worsened prospects are in turn affecting confidence, demand and growth today.”

Blanchard saw three key risks to the outlook. The long period of low interest rates posed risks, such as increased household indebtedness. Australia was ranked in this category.

Geopolitical risks have also become more relevant, although Blanchard said the effects of the Ukraine crisis have so far not spread, and the turmoil in the Middle East has yet to have much impact on energy prices.

“But clearly, this could change in the future, with major implications for the world economy,” he said.

He also said the tentative recovery in the euro area could stall, although this was not the IMF’s baseline case.