According to the International Monetary Fund (IMF), Australia is likely to have reached its pre-COVID economic levels as of the March quarter, which could help limit long-term scarring.

The IMF’s latest economic outlook sees the Australian economy expanding by 4.5 per cent this year, up 1 per cent on its January predictions following a contraction of 2.4 per cent in 2020.

In upgrading its outlook, the IMF noted that the “Australian economy continues to show a strong recovery momentum” and that a “favourable labour market recovery continues to support a strong rebound in private consumption, added by wealth effects from rising house prices”.

It also stated that record-low interest rates are continuing to boost the economic recovery.

Treasurer Josh Frydenberg pointed to the government’s economic recovery plan, which includes tax cuts, business investment, infrastructure and targeted support as a further boost to the economy.

“These household and business incentives will help to unlock the more than $240 billion of savings accumulated throughout the pandemic and sitting on private sector balance sheets,” he said.

According to the forecast, Australia also continues to compare remarkably well to other nations, with the IMF forecasting Japan’s economy to grow by 3.3 per cent, Germany by 3.6 per cent and Italy by 4.2 per cent.

“Encouragingly, global growth has also been revised up by 0.5 percentage points to 6.0 per cent in 2021 and by 0.2 percentage points to 4.4 per cent in 2022.”

“Having outperformed all major advanced economies on the economic front in the last 12 months, there is no other country you would rather be in than Australia,” Mr Frydenberg concluded.