Gravely, The Danger Of An Australian Recession Is A Genuine Possibility

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There is a crucial alert that Australia’s economic condition could be on the verge of entering recession territory.

John Hewson, former leader of the Liberal Party, has cautioned that with new risks to Australia’s economy on the rise every day, a recession here at home may be unavoidable.

Dr Hewson attested that due to Australia’s unfortunate mishandling of the Covid-19 pandemic and rising interest rates. At the same time, the federal budget needs repair; a recession could easily be on the horizon – even without considering any global economic issues.

Dr Hewson warned that the nation’s economic managers might experience a more significant challenge in 2023 than during Covid-19-related shutdowns and the global financial crisis. He was concerned about the potential lasting impact of Covid-19, including continued workplace shortages and absences resulting from its broader economic implications.

He mentioned that it was still being determined whether the Reserve Bank of Australia’s firm monetary policy – including eight consecutive rate hikes since May 2020 – could bring inflation down without resulting in a recession.

Official forecasts suggest that they will muddle through with lower but not negative growth. But even the RBA has warned that bringing inflation back to target while avoiding a recession is a ‘narrow path’,” Dr Hewson said. 

The esteemed Dr Hewson articulated that the only way to repair Australia’s budget, estimated at a $36.9bn deficit this financial year, is through reducing spending and raising taxes – which could potentially threaten our economy with recessionary effects. These issues are compounded by global economic hardships caused by extended conflicts in Ukraine and the Covid-19 resurgence in China.

After leading the Liberal Party from 1990 to 1994, Dr Hewson was defeated in the 1993 Australian Federal Election. Now a professor at The Australian National University’s Crawford School of Public Policy and has worked with esteemed organisations such as The Australia Treasury (Census and Statistics), IMF and Reserve Bank, his impressive career speaks for itself.

The Australian economy is showing promising growth, with September GDP figures from the Australian Bureau of Statistics displaying a 0.8% increase primarily driven by robust household spending.

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