Treasurer Jim Chalmers says Australia is on track to avoid a recession despite the nation’s outlook being downgraded and a stalling international economy.
The International Monetary Fund delivered a downbeat prediction for the global economy in its latest outlook, warning high inflation coupled with financial system turmoil could bring near-recession conditions.
Dr Chalmers said neither Treasury nor the Reserve Bank were expecting Australia to slip into recession but the economy was forecast to slow.
“We are better placed than most countries because of lower unemployment, because of the prices we’re getting for our exports and some of the other advantages we have,” he told ABC Radio on Wednesday.
The International Monetary Fund predicted Australia’s GDP growth would stall to a lowly 1.6 per cent in 2023, followed by a 1.7 per cent lift in 2024.
The forecasts were slightly ahead of those for the US and Canada, while the UK economy was expected to shrink this year.
Dr Chalmers said each nation had its own combination of economic challenges.
“But as the IMF points out, we won’t be immune from a global slowdown,” he said.
Deputy Liberal leader Sussan Ley said the government needed to focus on cost-of-living pressures in its May budget to counter the worst of rampant inflation.
“There’s no start date to cheaper power prices. There’s no start date to cheaper mortgages but there’s a feeling people have been left behind,” she told Sky News.
“There’s no plan for tackling inflation when we wake up to news of deteriorating economic environment both nationally and internationally.
“It’s so important the government gets this budget right.”
Cost of living pressures continue to weigh on consumer confidence levels and work against the Reserve Bank’s decision last week to keep the cash rate on hold.
The pause in interest rate increases after 10 hikes in a row fed into the 1.1-point lift in the ANZ and Roy Morgan weekly consumer sentiment index.
Confidence among mortgage holders lifted by 3.9 points across the week.
But at 79.3, the index remains weak by historical standards and stuck below 80 points for the sixth week in a row.
Dominic Giannini and Poppy Johnston
(Australian Associated Press)