Jim Chalmers’ disturbing message to Australians, warning of a major challenge ahead
Economic problems in China could hurt Australian jobs and growth.
The country’s largest trading partner has suffered an economic slowdown in recent weeks, with deflation and exports falling and unemployment rising.
Treasurer Jim Chalmers said the slump in China’s economy paints a worrying picture.
“Many economists around the world are currently concerned about China’s economy, and… I share that concern,” he told ABC Radio on Friday.
“What we’re seeing… is a very different combination of challenges compared to most of the rest of the world.”
Increasing economic headwinds in China, where growth is slowing, will have major implications for Australia, treasurer Jim Chalmers warned
The treasurer said a weak retail sector in China, along with concerns about the real estate sector and local government debt, are problems for the superpower.
“All of these things put together paint a pretty disturbing picture,” he said.
“We are watching these developments very closely, as you would expect, because in our economy … the two things that are likely to matter most to that trajectory are the developments in China, but also the impact of these interest rate hikes. the one in the system.’
Trade with China accounts for about a third of all Australian exports.
Exports to China have recently been boosted by developments that saw the lifting of tariffs on Australian barley after three years.
It is hoped that tariffs on other banned products, such as wine and lobster, will also be lifted.
Asked about the potential for a recession, Dr Chalmers said the Australian economy was expected to continue to grow, despite the impact from China and rising domestic interest rates.
A recession is defined as two consecutive quarters of negative economic growth.
“The Treasury Department’s forecasts are for continued growth, but in reality rather flat growth,” said Dr Chalmers.
ANZ economists said they expected real GDP growth of 0.2 percent for the second quarter, or 1.7 percent for the full year.
Figures to be released next week will give an indication of how detrimental the 400 point domestic rate hikes since May last year have been to the economy.
Retail sales are expected to show modest growth on Monday, after falling 0.8 percent in June.
From the quarterly figures to be published on Wednesday, a small profit in the construction work carried out is expected.
ANZ economists expect the monthly consumer price index to be released on Wednesday to show an increase of 0.8 percent, largely driven by energy prices.
Incoming Reserve Bank of Australia Governor Michele Bullock will also shed light on the state of the economy when she gives a speech in Canberra on Tuesday.