Federal treasurer Jim Chalmers has warned homeowners that more pain is likely to come as interest rate hikes begin to weigh on the economy.
Ahead of his trip to the US to meet with Federal Reserve Chairman Jerome Powell and World Bank President David Malpass, Dr. Chalmers that economies around the world are facing the headwinds of high inflation and rising interest rates.
“These global challenges we face are increasing, not disappearing: inflation is rampant; central banks respond with blunt and brutal rate hikes; and growth is slowing,” wrote Dr. Chalmers in: the Australian (paywall).
“The US and UK economies are reversed; China’s has slowed considerably; and the war in Ukraine sparked an energy crisis that shows no sign of abating. That is why the International Monetary Fund is not ruling out a new global recession.”
Mr Chalmers said that given the low unemployment rate and strong economy, Australia should outperform other developed economies.
“I am optimistic and confident about the future, but realistic,” he said.
“Like other countries, we are still faced with that now familiar and undesirable combination of supply chain disruptions, high and rising inflation, and falling real wages.”
According to Mr Chalmers, much of the cost of living in Australia has been imported.
“Our challenges are primarily, but not exclusively, global, but a wasted decade of missed opportunities and distorted priorities has made us more vulnerable to these shocks,” he wrote.