Australia hopes to fight recession despite global economic risks-Treasurer According to Reuters

SYDNEY (Reuters) – The Australian economy is likely to avoid a recession despite the world economy being in “a dangerous place right now”, Treasurer Jim Chalmers said on Tuesday, ahead of the first budget. government first for two weeks.

Speaking to the press, Chalmers warned the global economy was headed for a significant recession and Australia would not be “immune” to that.

However, the government does not expect that the Australian economy will go backwards.

“The budget that I put in… will not have the expectation or forecast that the Australian economy will fall into a recession,” he said.

Rampant interest rate hikes to contain inflation, continued highs in food and energy prices and geopolitical risks from Russia’s war in Ukraine have raised fears of a global recession over the past few months. next.

Both the World Bank and the International Monetary Fund on Monday warned of a growing risk of a global recession, citing concerns about slowing growth in advanced economies and currency devaluation. in many developing countries.

Noting the economic strains already in place in the domestic economy with households under pressure and businesses grappling with rising costs, the Reserve Bank of Australia last week unexpectedly slowed the pace. raised rates by 25 basis points, after four outsized moves of 50 bps. .

The RBA also warned of growing financial stability risks, which will be “magnified by a further significant tightening in global financial conditions.”

Chalmers said inflation, the global economy and spending pressures are the three most important factors underpinning the budget, which will be released on October 25. It will be the government’s first budget. Labor after winning the election in May.

“We can expect a significant downgrade to the global growth outlook in the Budget,” said Chalmers. “It won’t be fancy. It won’t be flashy. It’ll be responsible. It’ll be solid.”