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The treasurer also warned of the need to keep a lid on budget spending, saying the government had an important role in improving the quality of spending.
“Right now, every household has to make tough decisions about what they can and can’t afford, and it should be no different for their government,” he said.
Srinivasan said governments in the region should tighten their fiscal policy settings.
“Fiscal policy will need to be tightened in countries facing high debt levels, providing a complement to monetary efforts to control inflation,” he said.
“At the same time, targeted and temporary fiscal transfers are needed to support vulnerable people facing renewed shocks, especially from high energy or food prices.
“This fiscal support must be budget neutral in most cases, financed by new revenues or by reorienting budgets to avoid adding debt or working against monetary policy.”
The fund said it is not just Australia where economic growth is likely to be slower than forecast in March.
Forecasts for Japan, South Korea, China, India and Thailand have been downgraded for this year and next.
Australia’s economy is forecast to grow faster than Japan (1.7% in 2022 and 2023) and South Korea (2.3% and 2.1%).
Overnight, official figures in the United States showed a second consecutive quarter of negative growth in the world’s largest economy.
The US economy shrank 0.2%, largely due to a slowdown in stockpiling.
Recessions in the United States are officially determined by the National Bureau of Economic Research.
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