AMP Chief Economist Shane Oliver says a sharp slowing in economic growth will cause a “very high” risk of Australia entering a recession by early 2024.
“The risks are becoming increasingly skewed and every interest rate hike by the RBA increases that risk,” Mr Oliver told Sky News Australia….(read more)
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The risk of Australia entering a recession by next year is ‘very high’
As the world grapples with the economic fallout of the ongoing global pandemic, many countries are experiencing severe economic downturns. Australia, known for its robust economy, is not immune to these risks. In fact, experts are warning that the risk of Australia entering a recession by next year is ‘very high,’ raising concerns about the nation’s economic future.
The Covid-19 pandemic has inflicted immense damage on Australia’s economy, causing a significant slowdown in various sectors. Social distancing measures, lockdowns, and travel restrictions have crippled industries such as tourism, hospitality, retail, and even construction. These sectors, which used to be major contributors to the country’s growth, have experienced massive declines in revenue and employment.
Moreover, Australia’s heavily reliance on international trade has also become a major drawback during these uncertain times. Countries across the globe are implementing protectionist policies, disrupting supply chains and hindering foreign investments. The restrictive measures taken by major trading partners have directly impacted Australia’s exports, leading to a significant reduction in the demand for its commodities, particularly in areas such as mining and agriculture.
Unemployment has surged to record levels in the country, with many individuals and businesses struggling to make ends meet. The government’s job support measures, such as the JobKeeper payment and the increased JobSeeker allowance, have provided some relief, but they alone cannot ensure a strong economic recovery. With a decrease in consumer spending and business investment, the overall economic activity remains subdued.
Another crucial factor impacting Australia’s economic health is the collapse of the international education sector. A significant number of international students, who used to contribute billions of dollars to the Australian economy annually, are now unable to travel to the country due to travel restrictions. This situation has inflicted a severe blow to the education sector, which has a ripple effect on various associated industries such as accommodation, retail, and hospitality.
The Reserve Bank of Australia (RBA) has been attempting to stimulate the economy and mitigate the economic risks. It has slashed the official interest rates to record lows and provided liquidity to the banking sector. The government has also introduced stimulus packages and infrastructure spending initiatives to kickstart the economy. However, these measures might not be sufficient to prevent a recession given the unprecedented scale of this crisis.
Furthermore, the effectiveness of government and central bank measures hinges on the successful containment of the virus. If there is a resurgence in Covid-19 cases and subsequent lockdowns, it would further exacerbate the economic downturn. The fear of a possible second wave of infections looms large, adding to the uncertainty surrounding Australia’s economic recovery prospects.
To mitigate the risks, the government and policy-makers should consider adopting multi-pronged strategies. These strategies could involve diversification of the economy by investing in technology, innovation, and renewable energy sectors. The promotion of domestic tourism, reduced reliance on international markets, and the development of stronger manufacturing capabilities could also aid in minimizing the risk of a recession.
While the immediate future looks challenging for Australia, there is hope that the country can overcome these obstacles and navigate its way out of a potential recession. A cohesive and coordinated effort involving both government and the private sector will be crucial in reviving the economy and safeguarding the livelihoods of Australians. However, until the global pandemic is under control, the risk of a recession remains ‘very high.’
Jai Hinduja. No recession without giving it a good fight. Government should Spend, Spend and Spend to beat off recession. The Fed is pausing and may even be reversing rate tightening policy. So increasing Aukus and other military spending like for the Ukraine war will create more local jobs and release the pent up consumer demands to prevent businesses from folding up
100% guaranteed
Recessions are absolutely necessary for the economy to thrive and be sustainable. The stupidity of people getting into large debt when things are good and interest rates are low is a very bad idea. Now millions are in debt, struggling, going through depression and some may even be thinking of suicide. This stupid idea of large debt is terrible. People need to be preparing and have a plan for recessions because if history has taught us anything an economy cannot function without recessions. The idea that Australia is immune is wrong, the government has been manipulating and kicking the can down the road to avoid a recession, they need to let them happen every decade or so to keep the economy stable and inflation down. Individuals need to plan for recessions and stop seeing it as bad thing.
If you take out things like fuel everything is still going up much more than 5.6%. The RBA is not stupid. Any pause in interest rates will make inflation to start to rise again and in July everything is set to go up again!
Recession fears mount on Wall Street and inflation remains well above the Fed's 2% target, some of the top commentators in markets, business, and economics have been sounding off on just how bad they think the next downturn might be — and how far stocks may have to fall. I need ideas and advice on what investments to make to set myself up for retirement, my goal is to have a portfolio of at least $850k at the age of 60.
It< makes sense, BTC and crypto is off helping to regulate, rather than pretend it won't ever happen. The big institutions getting in is the catalyst that will launch us into the stratosphere. Most people don't like change but after the change is made they grow used to it and it becomes a non issue usually because their fears never materialize. The projects that initiated the process of regulation have not been ruined, they got involved in setting guidelines and helping the regulators understand the crypto space. I’d get involved more knowing that I have made over 8.2 btc and 12ETH from day-trade with Elizabeth Warran Jacob Crypto in few weeks
Found out today that our Nuke powered Submarines are not yet a done deal, America wants more money, Bend over Australia
A recession that is man made ….ie induced by the RBA ….is OK.
It is man made …and it can be man unmade.
The RBA want a mild recession to cool the economy to beat inflation.
I mentioned recession last year and all the social media keyboard warriors blasted me as if I've committed blasphemy…….. I'm still waiting for those muppets to have a go at me
Without real reduction of government spending, and a reversal of the power poverty madness, a serious recession is certain. The Reserve has no options, but to continue to raise rates! The economy is a death spiral, a dog chasing its tail!
The government has a solution: import more Uber drivers and get more overseas university students
Don't worry everything will be over as upcoming event arrives… St.Thomas
That’s what happen to countries that entirely live off borrowed money
The recession we had to have number two. Courtesy of a high spending Labor government.
Let it rot
The outcome was a desired consequence
About time we have a decent recession. It’s a cycle that need’s to happen.
No shit, foreclosures are coming but wasting billions on the Voice is all that matters.
Time to tighten our belts mate and look for a lasting solution
Why wait till next year join the rest of us now.
Members of the "dismal science" are warning of a recession? Well, who would have thought. Funny how the commentator's of managed funds are screaming that the RBA are incompetent and shouldn't raise rates! Vested interests maybe?
someone's pushing very hard for this happen, is it a someone or still a platform? What misery does this conservative what wing want to inflict on as now so it plays out during this so-called labor term?
Removing up to $1,500 from people's tax returns would have been a good way to try and curb inflation but now it will result in people having less to spend weakening the economy! Finally the younger generations will see what Labor is! Economically incompetent!
Start a rumour…. create a panic… report on the panic… make the rumour reality.