Every six months the IMF releases its world economic outlook, which gives us its view of how the economies around the world are travelling. The rather good thing about the outlook is you don’t need to understand much about economics to grasp what they are thinking, because the titles give it away, and the latest title suggests things are becoming decidedly bad.

In April last year, all was seemingly good from the IMF. Its outlook was titled “Cyclical upswing, structural change”. By October, the clouds were forming and the title of “Challenges to steady growth” conveyed a sense that things could turn for the worse.

And they did.

Its January update this year was titled “A weakening global expansion” , and the April outlook confirmed the bad news: “Growth slowdown; precarious recovery”.

In 12 months we had gone from an upswing to a slowdown.

Labor urges fiscal stimulus as IMF downgrades Australia's economic growth Read more

Hope you enjoyed the good times while they lasted.

In April I noted of the IMF’s outlook that “Should the world’s economy continue to slow and not improve next year by as much as the IMF would hope, the choice of delivering a surplus next year or stimulating growth through greater spending will very much come to the fore”.

Well the bad news is that the world’s economy has continued to slow.

The latest IMF outlook is headed: “Global manufacturing downturn; rising trade barriers”.

The title of the blog post from the IMF summarising the report is “Synchronized slowdown, precarious outlook”

Eighteen months ago there was a “Cyclical upswing”, now it is a “Synchronized slowdown”. A year ago it was “precarious recovery”; now recovery is far too optimistic and instead we have “precarious outlook”.

In April, the IMF anticipated the world economy would grow by 3.3% this year; now it expects just 3.0% growth.

The big downward revisions have come from China, and economies outside of the G7 and Euro area (which includes Australia):

It is quite stunning how quickly the outlook for Australia this year has tanked.

From 2014 to the start of 2018, the IMF, acting on advice from the Treasury department, was predicting growth this year of around 2.9% to 3.0%. And then in October last year this was revised down to 2.8%; then 2.1% in April, and now they predict a mere 1.7% growth:

That agrees with the most recent GDP figures, which showed Australia’s economy grew slower in the 12 months to June this year than it had any time since 2001.

And there is not a great deal of good news for next year either. The IMF also revised down its prediction for Australia’s GDP growth in 2020 from 2.8% to 2.3%

If that were to happen, it would be the worst two-year period of economic growth since the 1990s recession.

And the forecasts make it abundantly clear we are in an era of awful growth. At no point out to 2024 does the IMF expect our economy to grow by more than 3% in any year, and GDP per capita is not excepted to rise above 1.5% – both previously standard levels of growth, but which have barely occurred in the decade since the GFC:

The treasurer, Josh Frydenberg, responded to these figures by preaching the importance of a surplus – telling reporters yesterday that the government remains “committed to the surplus” and that the “Australian public ... know when you pay down Labor’s debt, you help ensure the economy is more resilient for the economic shocks into the future.”

And yet it is pretty clear we are already in an economic shock.

The government is acting like it is saving up for a rainy day and then seems unable to realise that the sunshine has gone and there is now water falling from the skies.

The treasurer suggested things weren’t that bad because “the IMF has confirmed that the Australian economy will grow faster than any G7 nation, except the United States”. Now that is true as far as it goes (which is not very far), but we are not members of the G7. We are, however, members of the OECD, and among those nations we are in the bottom half.

However, when we look at GDP per capita growth the full horror of the current situation reveals itself.

We are projected to have worse GDP per capita growth this year than any of the G7 nations and the fifth worst of all 36 OECD nations:

The past five years have seen our economy barely grow more than 0.3% pts faster than the average of the IMF’s list of advanced economies – a group which we normally outpace by close 1%pt:

Our economy is not growing well, neither historically nor against other advanced economies.

This was known before the election, and ever since the evidence has only become more clear. All the while the Reserve Bank keeps cutting rates and wondering when is the government going to wake up to reality and realise that monetary policy alone is not enough.