It’s been a bumpy few years for our economy, but is Australia about to enter a recession? Maybe not, if this report is correct.
After several bumpy years of performance, the International Monetary Fund (IMF) has some good news for the Australian economy.
In its latest annual examination of the Australian economy, the IMF says it expects Australia to avoid recession in 2023. But we’re not completely out of the woods just yet.
“Australia is expected to steer clear of a recession, but with significant downside risks,” the report states.
The report points to the nation’s stronger than expected recovery after the impact of the COVID-19 pandemic. It expects our economic growth to slow, but not reverse.
“The economic recovery in Australia since the depth of the pandemic has been among the strongest in the advanced economies, growth is expected to slow to about 1.7 percent in 2023 amid a difficult global economic outlook,” the report states.
“Between the slowing global growth and some still-resilient domestic buffers, Australia is on a narrow path for a soft landing.”
Economic challenges ahead
The report also highlighted the myriad challenges facing the Australian economy in coming years. Inflation, China’s slowing economic growth and the ongoing invasion of Ukraine are but a few.
It noted the consecutive Reserve Bank of Australia (RBA) interest rate rises and the effect they have had, and will have, on household budgets. It also said the RBA’s policy was the right one for now if it was to seriously address inflation.
“Continued monetary and fiscal policy tightening is needed to rebalance domestic demand and keep inflation expectations well anchored,” the IMF says.
“The RBA should continue to raise interest rates, and fiscal policy should support it in moderating domestic demand growth through judicious budget execution and saving of any revenue overperformance.”
Treasurer Dr Jim Chalmers told Michael West Media that the IMF report was a ringing endorsement of his first Budget in October.
“The government is returning 99 per cent of the upward tax revisions for the next two years to the Budget when the inflation challenge is most severe, and 92 per cent over the forward estimates,” Dr Chalmers said.
“This compares to the former government’s average of around 40 per cent.”
Do you think the Australian economy will enter recession? How will you navigate a recession? Will your retirement plans change? Is the government doing enough? Let us know in the comments section below.
