Treasurer Jim Chalmers says Australia might be watching China’s response to its newest Covid outbreak intently, as he warned the nation is “not immune” to an impending world downturn.
Speaking in Queensland on Monday, Dr Chalmers mentioned whereas he’s “optimistic” in regards to the financial outlook for 2023, the Labor authorities is remaining “realistic” about what the subsequent 12 months has in retailer.
“Most people expect 2023 will be a difficult year in the global economy,” he informed reporters in Queensland on Monday.
“We won’t be completely immune from that.”
Dr Chalmers mentioned China’s administration of its newest Covid outbreak, the continued invasion of Ukraine and the influence of ongoing charge rises from the RBA would all play main roles in Australia’s financial outlook over the approaching yr.
“This year will be about more than battening down the hatches, more than building our buffers against another global downturn. It will be about building a better future so that Australians can grow out of this global downturn the right way – strong, inclusive, sustainable,” he mentioned.
China’s abrupt swap from its zero-Covid coverage to a “new phase” of dwelling with the virus late final yr has sparked a “substantial wave” of latest circumstances, which is already having a big effect on financial exercise.
“The Covid wave in China is already having a substantial impact on supply chains. We expect that to get more difficult before it eases,” Dr Chalmers mentioned.
“When you’ve got a Covid wave like we’re seeing in China, when they’ve had until quite recently a zero-Covid approach to managing the pandemic, then that has obvious consequences for the Chinese workforce and for supply chains right around the world.”
The Treasurer mentioned one other main consider how the nation fared economically can be the massive proportion of Australians coming off fixed-rate mortgages over the subsequent yr.
“They’ll roll off a low fixed rate onto a much higher variable rate and that understand that will put a lot of pressure on household budgets,” he mentioned.
