Invest
Australian economy looks to make up for lost time
Policymakers will use the upcoming budget and record low rates to make up for a lost year, an industry expert has said.
Australian economy looks to make up for lost time
Policymakers will use the upcoming budget and record low rates to make up for a lost year, an industry expert has said.
Despite the economy showing strong signs of recovery through improved labour markets, business spending and consumer confidence, fiscal and monetary policy is tipped to remain supportive throughout the next financial year.
According to Janus Henderson’s investment strategist, Frank Uhlenburch, off the back of improving economic conditions, Australia’s economy is likely to expand by 5 per cent over 2022 and just under 3 per cent the year after.
“The Australian economy looks to be at peak growth rates as it makes up for lost time spent in lockdown. Businesses and consumers are bullish on the outlook and the labour market has improved quicker than expected,” Mr Uhlenburch said.
While the outlook continues to improve, he said policymakers are unlikely to remove current support, but highlights the improvements will see the budget coming from a place of strength.
“A much stronger than anticipated recovery gives the government more headroom in the upcoming May budget. While the budget deficit will be significantly lower than projected, the Treasurer has already signalled there will be no premature shift to austerity, with budget repair contingent on the unemployment rate falling to below 5 per cent,” he said.
Janus Henderson expects the RBA to upgrade their forecasts in the upcoming May Monetary Policy Statement; they don’t expect them to shift from their dovish outcomes-based stance.
He said the stance of monetary policy will only change once the tightening trifecta conditions have been met. These are:
- an unemployment rate close to 4 per cent;
- actual inflation at 2 per cent or above on a sustainable basis; and,
- wages growth of at least 3 per cent.
“While the RBA has signalled it doesn’t see policy tightening until 2024, markets are looking at 2023. With the domestic yield curve steepening significantly over recent months, markets have the future cash rate lifting to over 2 per cent from 2026 and above our estimates of the neutral cash rate. This implies restrictive policy settings over the second half of the decade and is premature in our view,” Mr Uhlenburch concluded.
About the author
About the author
Economy
Fed decision set to pressure emerging market central banks to hike rates
The Federal Reserve's expected decision to maintain US interest rates at a two-decade high at its sixth consecutive meeting on Wednesday is set to put pressure on emerging market central banks to hike ...Read more
Economy
Fed keeps rates steady, signals higher for longer amid elevated inflation
The Federal Reserve kept interest rates unchanged at its May meeting and signaled that rates are likely to stay higher for longer given elevated inflation in the first quarter, while also announcing a ...Read more
Economy
CPI data another piece in RBA's interest rate decision puzzle, says REIA
The latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS) shows that inflation rose 3.4% in the 12 months to February 2024, unchanged from the previous two months, ...Read more
Economy
Including passive job seekers in unemployment measure doesn't impact economic cycle view, study finds
New research from e61 Institute has found that while current unemployment measures may not capture all job seekers, broader definitions that include passive job searchers do not provide better ...Read more
Economy
Survey reveals heightened job security concerns among IT workers in 2024
A recent survey conducted by Authority Hacker has revealed that 89.66% of IT workers in the United States have increased concerns about job loss in 2024. Read more
Economy
Australian founders adapt to the challenging fundraising environment with optimism and strategic shifts
The landscape for start-up funding in Australia has been increasingly challenging, but this has not dampened the spirit of the country's entrepreneurs. Read more
Economy
Signs point to possible US economic 'soft landing' in ClearBridge analysis
The US economy may be steering towards a 'soft landing' despite mixed signals from the stock market, according to a recent analysis by ClearBridge Investments. Read more
Economy
Alternative fund managers predict capital raising surge in 2024
Alternative investment fund managers are predicting a sizable increase in capital raising efforts in 2024, according to a global study by Ocorian, a leading alternative investment fund administratorRead more
Economy
Fed decision set to pressure emerging market central banks to hike rates
The Federal Reserve's expected decision to maintain US interest rates at a two-decade high at its sixth consecutive meeting on Wednesday is set to put pressure on emerging market central banks to hike ...Read more
Economy
Fed keeps rates steady, signals higher for longer amid elevated inflation
The Federal Reserve kept interest rates unchanged at its May meeting and signaled that rates are likely to stay higher for longer given elevated inflation in the first quarter, while also announcing a ...Read more
Economy
CPI data another piece in RBA's interest rate decision puzzle, says REIA
The latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS) shows that inflation rose 3.4% in the 12 months to February 2024, unchanged from the previous two months, ...Read more
Economy
Including passive job seekers in unemployment measure doesn't impact economic cycle view, study finds
New research from e61 Institute has found that while current unemployment measures may not capture all job seekers, broader definitions that include passive job searchers do not provide better ...Read more
Economy
Survey reveals heightened job security concerns among IT workers in 2024
A recent survey conducted by Authority Hacker has revealed that 89.66% of IT workers in the United States have increased concerns about job loss in 2024. Read more
Economy
Australian founders adapt to the challenging fundraising environment with optimism and strategic shifts
The landscape for start-up funding in Australia has been increasingly challenging, but this has not dampened the spirit of the country's entrepreneurs. Read more
Economy
Signs point to possible US economic 'soft landing' in ClearBridge analysis
The US economy may be steering towards a 'soft landing' despite mixed signals from the stock market, according to a recent analysis by ClearBridge Investments. Read more
Economy
Alternative fund managers predict capital raising surge in 2024
Alternative investment fund managers are predicting a sizable increase in capital raising efforts in 2024, according to a global study by Ocorian, a leading alternative investment fund administratorRead more