If migration numbers remain strong and China avoids a deflationary collapse, Australia will avoid a recession, senior government figures believe.
The federal government is preparing for the economy to slow even further as shoppers struggle to make ends meet, but it believes Australia will avoid a recession as long as migration remains strong and China avoids a deflationary collapse.across some of its stores as cost-of-living pressures hit consumers, the government is increasingly confident that the country will avoid a wage-price spiral that would force the Reserve Bank to lift interest rates even higher.Economic growth slowed to just 0.
But while the government believes economic growth will be slow for the rest of this year and into 2024, senior government sources say it is not expecting a recession.In the May budget, the government forecast the economy would expand by 1.75 per cent in 2023 before slowing to 1.5 per cent in 2024. The Reserve Bank has become more pessimistic about the outlook, in part due to its increases in official rates., largely due to subdued consumer spending and a drop-off in outlays on new housing.
He said the full impact of previous interest rate increases was yet to flow through the economy and that consumers were already struggling under the weight of higher monthly mortgage repayments.
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