The latest Australian Bureau of Statistics data shows the economy is “slumping”, but there is still time to prevent a recession.
Key points:The latest Australian Economic Outlook (AEO) said the economy was expected to contract by 2.2 per cent in 2016The unemployment rate stood at 6.2.
But the latest AEO found “an economic recovery has yet to be achieved”The ABS data shows that the economy contracted 2.3 per cent last year, the fastest rate since the end of the financial crisis in December 2008.
This is the worst contraction since 2008, when the economy shrank by 1.6 per cent.
The recession has left Australians “disappointed” at the state of their finances and “in despair” about their prospects, said a new report from the Australian Council of Social Service.
“We are seeing the negative impacts of economic uncertainty, including the impact of job losses and the impact on housing affordability,” said Paul Fletcher, chief economist at the AOSS.
The AEO said the economic recovery is still “far from complete”.
It said the unemployment rate rose to 6.4 per cent, which is the second-highest rate since December 2008, with a 6.1 per cent increase over the last year.
“The outlook for the unemployment and labour market is still very uncertain, but the AEO has forecast a gradual return to growth, with annual rates of 1.7 per cent over the next four years,” the report said.
The economy is expected to shrink by 2 per cent this year, but is expected not to reach the previous record-low unemployment rate of 6.5 per cent of people in December 2016.
The ABS has recorded a contraction of 2.6 percentage points over the past year.
The rate is expected rise to 3.5 percentage points by 2020.
“Inflation has been lower than anticipated over the forecast horizon due to lower prices,” it said.
“However, we expect that inflation will rise again, with an increase in the headline consumer price index by 2-3 per in the medium term.”
The AOSs report noted that the latest unemployment figures could be “inadvertent”, as people are looking for work.
“Despite this, there are significant risks associated with this report,” it warned.
The report also warned of a “long-term slowdown” in the Australian economy and warned that the country could be facing “a prolonged period of slow growth”.
The Australian Bureau, the ABS and other government agencies have been working to produce a comprehensive economic outlook, which will be released later this year.
Topics:economics-and-finance,people,government-and,social-policy,jobs,housing-industry,housing,business-economics,government,australiaFirst posted October 03, 2019 09:42:08Contact Kate KellyMore stories from Australia