![\"Shane](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/10\/057daa8f1b51682d1d002d4c2720328233762dc5.png\")
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Updated October 13, 2026 \u2014 3:52pm,first published 1:00pm<\/p>\n
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Remove items from your saved list<\/a> to add more.<\/p>\n No gift articles left<\/p>\n You’ve used all of your gift articles. 3 more will become available on the 1st of every month.<\/p>\n Close<\/p>\n AAA<\/p>\n Australia faces the biggest unemployment increase in the developed world next year, even as the country\u2019s economy remains one of the globe\u2019s fastest-growing and inflation cools, with warnings that the AI boom and soaring government debt<\/a> pose a growing risk to all nations.<\/p>\n Amid signs the Reserve Bank will accept higher unemployment and slower economic growth to help bring down inflation, the International Monetary Fund warned on Tuesday that the good luck that had helped the world economy overcome the turmoil caused by the US-Israel war against Iran<\/a> could soon run out.<\/p>\n The IMF is forecasting the global economy will expand by 3.1 per cent this year before increasing by 3.4 per cent in 2027. Inflation is expected to hit 4.7 per cent this year, largely due to a surge in prices for commodities including oil and food, before easing slightly to 4.1 per cent.<\/p>\n Australia\u2019s economy is tipped to grow by 1.9 per cent this year and 1.6 per cent in 2027. Both forecasts are 0.1 of a percentage point lower than the IMF forecast in April<\/a>.<\/p>\n At that level of growth, only the US, Spain, Singapore and New Zealand are expected to expand faster than Australia.<\/p>\n But unemployment in Australia<\/a> is expected to climb by 0.3 of a percentage point, from 4.4 per cent this year to 4.7 per cent in 2027. Almost all other developed nations are expected to enjoy either no change in unemployment or a small fall between this year and next.<\/p>\n At 4.7 per cent, the number of Australians out of work would approach 800,000 and would be almost 150,000 more than unemployment at 4.4 per cent.<\/p>\n Despite the increase, Australia\u2019s jobless rate remains lower than most other rich nations: the rate is 5.3 per cent in Britain, 8.1 per cent in Sweden and 6.3 per cent in Canada.<\/p>\n The lift in unemployment is expected to help reduce Australia\u2019s inflation rate, which is forecast to fall from 3.9 per cent this year to 3.1 per cent in 2027. At that level, only a small number of nations would have faced price pressures higher than Australia, including Austria and Greece.<\/p>\n Related Article IMF chief economist Silvana Tenreyro said the global economy had faced an \u201cexceptional sequence of events\u201d over the past seven years, including the pandemic, the disruption to global supply chains, the wars in Ukraine and Iran and challenges to the world\u2019s trading system.<\/p>\n She said the economy had got through all of this. The recent surge in oil prices<\/a>, for instance, would have ordinarily hurt the global economy, but a rundown in inventories, re-routing of new supplies and a sharp lift in renewable energy sources had all helped to offset the expected macroeconomic fallout.<\/p>\n However, Tenreyro said the way the world had responded to the lift in oil prices, on top of the economic boost produced by the AI construction boom<\/a>, was now under threat.<\/p>\n \u201cThis resilience is under strain. Without shoring up supply capacity and replenishing policy buffers, the global economy could soon test the limits of resilience,\u201d she said.<\/p>\n \u201cWith gains clustered in a small number of firms, sectors and economies, global expansion is heavily reliant on a narrow set of technological and financial conditions.\u201d<\/p>\n Tenreyro said the lift in government borrowing costs, which have pushed interest rates on public debt to their highest levels in more than a decade, meant governments had to find ways to reduce their debt levels.<\/p>\n \u201cStrong and deliberate actions are required to rebuild [budget] buffers and shore up the capacity to withstand future shocks \u2013 new or the same,\u201d she said.<\/p>\n Treasurer Jim Chalmers said the IMF report confirmed the global economy was under significant pressure because of the war in the Middle East.<\/p>\n \u201cThe war is pushing up global inflation while pressures in financial markets, high global debt and reassessments of AI expectations all pose considerable downside risks,\u201d he said.<\/p>\n Related Article \u201cWe are not immune from these global factors, but we are better placed than many others. We are well positioned to benefit from the global AI investment boom and our efforts to strengthen supply chains are helping to buffer us in a fragmenting world.\u201d<\/p>\n Shadow treasurer Tim Wilson said the IMF\u2019s report, which applies to all nations, was an indictment against the Albanese government\u2019s economic management.<\/p>\n \u201cThe Albanese government keeps pouring debt petrol on the inflation fire, and families and small business are paying the price through rising interest rates and higher prices at the supermarket,\u201d he said.<\/p>\n The report followed the release of the minutes of the Reserve Bank\u2019s most recent monetary policy committee meeting at which the official cash rate was pushed to a 15-year high of 4.6 per cent.<\/p>\n The bank seeks to hold inflation between 2 and 3 per cent while maintaining as many people in work as possible. For several years, it has noted the importance of trying to hold the jobless rate down while pushing up interest rates to bring inflation under control.<\/p>\n But the minutes suggest the bank is now prepared to accept higher unemployment if it means a quicker fall in inflation.<\/p>\n \u201cMembers acknowledged that the trade-off between inflation and full employment had deteriorated because of global cost pressures,\u201d the minutes showed. \u201cThey confirmed that their strategy was still to return inflation to target in a timely manner, while preserving as many of the gains in employment as possible.<\/p>\n \u201cHowever, executing this strategy in an environment of more persistent adverse supply shocks would require accepting slower growth in demand and employment than would otherwise be the case.\u201d<\/p>\n The Commonwealth Bank\u2019s head of Australian economics, Belinda Allen, said the comments suggested the RBA believed it may no longer be able to maintain the recent strength of the jobs market.<\/p>\n Financial markets put the chance of a follow-up rate rise by the Reserve Bank at its November 2-3 meeting at 30 per cent.<\/p>\n Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter<\/a>.<\/p>\n Save<\/p>\n You have reached your maximum number of saved items.<\/p>\n Remove items from your saved list<\/a> to add more.<\/p>\n No gift articles left<\/p>\n You’ve used all of your gift articles. 3 more will become available on the 1st of every month.<\/p>\n Close![\"The](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/10\/a3212396bb0a74554fad9aae1b6c658cfb8d75ac.jpeg\")
The number of Australians out of work could soar close to 800,000 by 2027.Louie Douvis<\/p>\n![\"Transport](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/10\/1791876733_206_5fa79aac45dfbce109eb02531f2c67808bc561bd.jpeg\")
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Shane Wright<\/a> is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"Updated October 13, 2026 \u2014 3:52pm,first published 1:00pm Save You have reached your maximum number of saved items.…\n","protected":false},"author":2,"featured_media":926364,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-926363","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/926363","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=926363"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/926363\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/926364"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=926363"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=926363"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=926363"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}