Jim Chalmers’ disturbing message for Australians as he warns of a major challenge ahead
Economic turmoil in China could hurt jobs and growth in Australia.
The country’s biggest trading partner has suffered an economic slowdown in recent weeks, with deflation and falling exports and rising unemployment.
Treasurer Jim Chalmers said the crisis in China’s economy painted a worrying picture.
“Many economists around the world are currently worried about the Chinese economy and … I share that concern,” he told ABC radio on Friday.
“What we are seeing…is a very different combination of challenges than most other countries in the world.”
Growing economic headwinds in China, where growth is slowing, will have major consequences for Australia, Treasurer Jim Chalmers has warned.
The treasurer said the weakness of China’s retail sector, as well as worries in the real estate sector and local government debt were problems for the superpower.
“All of these things put together paint a pretty disturbing picture,” he said.
“We are following these developments very closely, as you would expect, because in our economy … the two things that will probably matter most in this trajectory will be developments in China but also the impact of these increases. of (interest) rates that are running.
Trade with China accounts for around a third of all Australian exports.
Exports to China were recently boosted by the lifting of tariffs on Australian barley after three years.
It is hoped that tariffs on other products subject to trade bans, 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 growing, despite the impact of China and rising domestic interest rates.
A recession is defined as two consecutive quarters of negative economic growth.
“Treasury forecasts are for continued growth, but in reality rather flat,” Dr Chalmers said.
ANZ economists said they expected real GDP growth of 0.2 percent for the second quarter, or 1.7 percent for the year.
The figures to be released next week will give an idea of the extent of the damage done to the economy by the 400 point rise in national interest rates since May last year.
Retail sales data released on Monday is expected to show modest growth after falling 0.8 percent in June.
A slight increase in construction work carried out is expected in quarterly figures to be released on Wednesday.
ANZ economists expect the monthly consumer price index, released on Wednesday, to show an increase of 0.8 percent, largely driven by electricity prices.
New Reserve Bank of Australia Governor Michele Bullock will also shed light on the state of the economy during her speech in Canberra on Tuesday.