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Economic Update

Aust to better manage economic challenges

Australia economic challenges

Australia is well placed to mitigate the effects of the current economic headwinds when compared to other developed economies across the world.

A leading economist has recognised Australia has the ability to manage the economic challenges such as inflation currently facing the world better than other overseas regions.

“It’s interesting to look at what’s happening globally and compare it to Australia. Relatively we are incredibly well positioned actually [to manage the economic situation]. At the moment we’re talking about high inflation because we’ve just ticked over [an inflation rate of] 5.1 per cent [and] the US is tracking at about 8.5 per cent and about 1 or 1.1 per cent per month,” Austrade chief economist Heather Cotching noted at the Accounting Business Expo in Sydney last week.

“Our central bank tends to be more moderate historically than [that of the] US as well. So that means I think we’ll see a smoother [interest rate] path than we are likely to see in the US.”

Further, Cotching pointed out the inflationary situation in the country may not be as severe as currently thought as the government’s action to cut the fuel excise is yet to be reflected in the most recently published statistics and that this measure will have a deflationary impact in the coming quarters.

In addition, she acknowledged the role Australia’s high COVID-19 vaccination rate would play in avoiding economic stress.

“It’s worth keeping in mind we are the 14th most vaccinated country in the world and that means, in terms of our prospects for this year and the opening up of our economy and the opening up of the international borders, we still are pretty well positioned,” she said.

“There are a lot of countries, either because they are closer to Europe, or they’re managing inflation challenges in the US, or massive supply chain issues, that are actually struggling more than we are.”

According to Cotching, the wheat production of this country and a positive agricultural season are other factors that will see Australia experience easier economic times than other global markets.

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