Economists are concerned about mass job losses after the latest official data showed the economy slowing to a crawl as interest rate hikes temper demand. Source: ABC News.
The Australian economy is limping along, and many households are feeling the strain. Bureau of Statistics figures show the Australian economy grew at 0.2 per cent in the three months to December.
It means that Australia avoids a technical recession – defined as two consecutive quarters of negative growth – at least for the next few months.
Deloitte Access Economics partner Stephen Smith says the newly released data shows that “while Australia is not in a recession, many Australians are in a recession”.
He says record levels of migration, exports to China, and government spending have propped up an otherwise sagging economy.
“Without that population growth, the economy would have gone backwards by about 1 per cent over the last 12 months.
“And so it’s really population growth – more people in Australia, spending more – that’s what’s propping up the economy at the moment and keeping us out of recession.”
To bring growth in prices back down to between 2 and 3 per cent, the Reserve Bank has raised interest rates 13 times, in an effort to slow demand in the economy. But 13 interest rate hikes have not brought rents, property and petrol prices, or insurance premiums, back down to more normal levels.
And what if those stubbornly high costs of living don’t fall further and higher interest rates continue to strangle the economy?
RBC Capital Markets and Deloitte Access Economics forecast the official unemployment rate to peak at 4.6 per cent. That equates to roughly 700,000 Australians out of work.
Right now, according to the December labour force data, 570,400 people are unemployed.
It means a further 129,600 workers would need to be shown the door.
FULL STORY
Tens of thousands more jobs must go to finally crack this cost-of-living crisis, economists say (By David Taylor, ABC News)
