Sub-trend growth likely for sometime: IMF November 21, 2013 - 11:05AM The International Monetary Fund (IMF) believes it could take until 2016 before the Australian economy returns to trend growth of around three per cent. Its preliminary annual report on Australia says resource exports are expected to expand rapidly and contribute to growth, but the outlook for the non-resource sector is more uncertain. While interest rates cuts since the end of 2011 had produced some traction and would support housing investment, the labour market remained soft and non-mining investment was being capped by a strong Australian dollar. The local currency is acting as a "headwind" to overall growth, and despite some depreciation since April, the IMF still sees the currency as over-valued by around 10 per cent. "Given these conditions there is a real possibility that the transition to broader based growth may prove to be bumpier than expected," the IMF said. The near-term growth outlook could worsen, especially if external developments keep the dollar from falling to levels consistent with fundamentals. If this prove to be the case, wages and employment growth would slow further, consumption growth would decline and government finances would weaken. However, the Reserve Bank of Australia (RBA) still has room to stimulate the economy if this happens. The Washington-based think tank has forecast Australian economic growth of 2.5 per cent this year, before output rises to a trend rate of about three per cent by 2016.