Just hours before Treasurer Scott Morrison hands down his second budget, the International Monetary Fund has offered some sage advice – keep Australia’s borders open to foreign workers.
At a time when the Turnbull government is tightening the criteria for foreign workers and Labor is in a flap over it’s “Employ Australians First” ad, the IMF says inward migration can soften the impact of a rapidly ageing population.
“The impact of continued immigration on the workforce could add between 0.5 and one percentage point to annual average growth,” it says in its latest regional outlook for Asia and Pacific.
It says migration can reduce but not reverse the negative impact of ageing on growth, and Australia would need to receive immigration around 23 per cent of the actual workforce by 2030 to offset the growing number of retirees.
Echoing its forecasts in its World Economic Outlook released in April, the IMF expects Australian growth to reach 3.1 per cent in 2017 and three per cent in 2018 – 0.5 per cent and 0.1 per cent higher than respectively forecast in October.
This was largely the result of improved domestic demand as the economy continues to adjust to the unwinding of the mining investment boom.
It says the outlook for the Asia-Pacific region remains robust and strongest in the world with recent data pointing to a pick-up in momentum.
However, it warns the near-term outlook is clouded with “significant uncertainty and risks” that on balance remain slanted to the downside.
“Macroeconomic policies should continue to support growth while boosting resilience, external rebalancing, and inclusiveness,” it says in the report released in Singapore on Tuesday.
“The region needs structural reforms to address its demographic challenges and to boost productivity.”