Economists are warning of a potential recession in Australia if the Reserve Bank reacts too strongly to higher-than-expected inflation next month. Deloitte Access Economics reports that without the federal government’s tax cuts, the country would already be on the verge of a recession.
Vital inflation data for the June quarter will be released before the RBA’s August meeting, where decisions on interest rates will be made.
Deloitte highlights the delicate position of the Australian economy, with high inflation and weak growth putting it at a “fork in the road”. The RBA’s decision could have significant impacts on households and businesses.
Deloitte presents two scenarios depending on the June quarter data: either the RBA raises rates, impacting confidence and economic recovery, or rates remain steady, supporting growth in 2024-25.
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Australia’s economic growth has been slow, with high interest rates and inflation hindering progress. The economy grew by just 0.1% in the first quarter of this year, with annual growth at 1.1%. Deloitte predicts a 1% growth rate for the entire year.
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