Australian Economy

As GDP figures are announced Australia’s economy faces two economic realities

Australia’s economy is just fine, thanks.

How do we know this?

Well, the Reserve Bank’s May Monetary Policy Statement said: “More broadly, the Australian economy remains resilient and is expected to grow strongly this year. GDP is forecast to expand by 4¼ per cent over 2022.”

And the former treasurer Josh Frydenberg in March said: “The Australian economy has outperformed all major advanced economies, experiencing a stronger recovery in output and employment compared to pre-pandemic levels.”

So why, then, did Treasurer Jim Chalmers say last week that inflation is “skyrocketing”, that the “fiscal situation we’re inheriting is dire”, and that Australians shouldn’t underestimate the seriousness of the economic problems the nation is facing?

Chalmers raises a hand with a decorative bracelet on his wrist as he speaks in front of a lectern.
The new Treasurer Jim Chalmers has warned that Australia faces a “dire” fiscal situation. (ABC News: Luke Stephenson)

If you dig into the numbers, it’s easy to see the economy isn’t in great shape — which has implications for every Australian.

Let’s explore that.

The economy is in neutral

When a treasurer informs the nation of how the economy is progressing, they refer to the work of the number crunchers at the Treasury.

In March, the Treasury stated: “Economic growth forecasts have been revised upwards, driven by stronger than expected momentum in the labour market and consumer spending.”

“Real GDP is expected to grow by 4.25 per cent in 2021-22, 3.5 per cent in 2022-23 and 2.5 per cent in 2023-24.”

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