Australia is set to suffer a hard two years, with the OECD forecasting the nation’s economic growth will fall to its lowest level since the early 90s recession.
In an updated economic outlook published late on Tuesday, the body dropped its projected GDP growth for Australia next year to just 1.3 per cent.
Treasury is forecasting growth of 1.5 per cent next year and Treasurer Jim Chalmers has warned officials expect the economy to “slow considerably” next year, although he maintained the country remains in a strong position to weather the slowdown.
“High interest rates, persistent inflation and the slowdown in China, particularly its struggling property sector, are all weighing on the global outlook,” he said.
“While we expect our economy to slow considerably over the coming year and the unemployment rate to tick up, we enter this period of uncertainty from an enviable position.
“We have a strong labour market, wages are getting moving again, and we continue to get good prices for what we sell to the world.”
If the revised OECD figure is accurate, Australia would see itself slip down the ranking of G20 members and into the bottom half.
It would also see the nation experience its weakest growth since the early 1990s, when high interest rates and massive unemployment rocked the economy causing huge distress for Australian households.
In Australia, the Reserve Bank has held interest rates steady for the past three months and OPEC is forecasting headline inflation in the country will fall from 5.5 per cent this year to 3.2 per cent next.
However, core inflation – which removes volatile factors such as fuel costs and is the RBA’s preferred measure – has shown signs of stickiness and may yet prove a challenge to bring down.
In their minutes from the September rates meeting, members of the RBA Board noted “some further tightening in policy may be required should inflation prove more persistent than expected”.
(SKY NEWS)
