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ALP to keep pressure on govt over economy

Colin Brinsden
Philip Lowe says it's quite probable the economy will return to trend growth over the next year

Federal Labor will continue to pursue the government to do more to support the economy, even though the Reserve Bank governor Philip Lowe has indicated he believes the growth slow down has bottomed out.

The economy was a key focus for the parliament last week after the International Monetary Fund cut its 2019 growth forecast for Australia to 1.7 per cent from 2.1 per cent.

"We certainly think there are things the government could be doing to improve confidence in the economy ... that they would acknowledge for a start there are problems in the economy," Labor's finance spokeswoman Katy Gallagher told Sky News on Sunday.

"They're very good at saying, 'oh, it's all these global economic headwinds', which we acknowledge, but they are less likely to accept that there are domestic issues here that they could have a hand in resolving."

Dr Lowe, in Washington last week for IMF's annual meeting, said it was quite probable the economy would return to trend growth over the next year.

"We have been through a very soft patch over the last year but it is actually gradually improving. Our interest rates are working," he said.

A return to trend would see annual growth pick up to around 2.8 per cent, double the pace recorded as or June.

Senator Gallagher hopes the governor is correct in his prediction

"It's in all our interest that the economy improves," she said.

The central bank has cut the cash rate three times in recent months to a record low 0.75 per cent.

Expectations for a further reduction were wound back last week after the jobless rate ticked down to 5.2 per cent from 5.3 per cent.

The economic outlook will be central to discussions when Treasury and its new boss Steven Kennedy face the Senate's economic committee on Wednesday.