By cutting rates, the RBA is sending a signal to the market, to politicians and to the community at large, that the Australian economy is not firing on all cylinders
Yesterday saw the long-awaited announcement by the US government of a Ce further $200bn of tariffs on imported goods from China. This instantly quadrupled the amount of tariffs previously implemented.
Last Friday, Australian time, the US placed another US$16bn worth of tariffs on imported goods from China. The real possibility of tariffs on a further US$200bn of Chinese imported goods into the US remains a far more significant risk to global economic conditions.
Data released by the Australian Bureau of Statistics (ABS) reveals wage growth is still persistently weak, while unemployment is trending down in most jurisdictions.
Australia is in the midst of a productivity growth malaise, but an often unspoken outlier, improving mental health, could be the microeconomic reform of the 21st century.
Governments and businesses around the world have expressed alarm at the possibility of a trade war developing from the planned US tariffs on steel and aluminium.
KPMG Economics’ global macroeconomic modelling suggests Australian GDP will be permanently reduced by 0.3 percent in the medium term as a direct consequence of the U.S. tax reforms. This equates to A$5bn and 25,000 jobs lost.
Ten years on from the GFC it is instructive to look back at the key signs preceding the crisis and ask, a decade on, whether we are now clear from those problems?
The underlying economic forecasts contained in the budget do not indicate boom times ahead, and there is current excess capacity within the Australian economy which will take some time to be taken up.
