Australia’s economy faces four major challenges amid an ongoing cost of living crisis that is crippling families.
The country’s current account plunged into a $4.9 billion deficit in the first three months of 2024, a far cry from the $5.1 billion surplus originally projected.
Throughout the March quarter, goods export volumes plummeted, reflecting reduced local coal and iron ore production.
However, this was more than offset by an increase in good import volumes, led by a strong restocking of consumer goods stocks.
Opposition Treasury spokesman Angus Taylor noted in question time on Tuesday that domestic inflation “is growing at five times the rate of imported inflation”, with core inflation up to 4.1 per cent. in April, which is higher than that of the United Kingdom, the United States, Japan and Canada.
“After three failed Labor budgets that drove up the price of food, electricity and mortgages, will the Treasurer finally admit, as the RBA Governor pointed out, that inflation is homegrown,” he asked.
Treasurer Jim Chalmers accepted that inflation “remains too high” but noted that “inflation was a six ahead” when Labor came to power in May 2022.
Treasurer Jim Chalmers accepted that inflation “remains too high” but noted that “inflation was a six ahead” when Labor came to power in May 2022.
‘We recognize that it is still too high with a three, but it is almost half of what we inherited from them (the other way around).
‘We are paying too much interest on debts, we had almost nothing to show for it despite all the waste and grievances of which the shadow treasurer was the model.
“We’ve spent two years cleaning up the mess we inherited.”
Services exports increased throughout the March quarter, as the rise in tourism was partly offset by the fall in international student numbers.
Due to falling commodity prices for Australian exports of iron ore and coal, coupled with a decline in oil prices on the import side, Australia’s terms of trade increased slightly.
As a result, net exports fell to $17.8 billion, and the drop is expected to shave 0.9 percentage points off Wednesday’s March quarter GDP reading, worse than the 0.6 reduction analysts had forecast. .
The country’s current account plunged into a $4.9 billion deficit in the first three months of 2024, a far cry from the $5.1 billion surplus originally projected.
Separate data released Tuesday also showed inventories rose as companies replenished more than expected during the quarter.
“Some of this weakness will be offset by an increase in inventories,” said Sean Langcake of Oxford Economics Australia.
“But (net exports) will drive a weaker-than-expected growth outcome in the March quarter.”
Following the new figures, economists will refine their forecasts for the March quarter national accounts data due to be published on Wednesday.
With consumer spending weakening and construction activity falling, the data is expected to show the economy expanded an anemic 0.2 percent in the three months to March, unchanged from the reading. of the December quarter.
An outcome in line with consensus forecasts would be that annual growth would decline from 1.5 percent to 1.2 percent, well below the projected population growth of 2.5 percent and would mark a deepening of the recession per capita of Australia for the fourth consecutive quarter.