The Australian economy has recently experienced one of its worst growth rates, with unemployment expected to peak in the near future, according to a new report. The Reserve Bank has been working to control inflation, which currently sits at 3.6 per cent, through two years of rate hikes. However, this effort seems to have come at a cost to jobs and overall economic growth.
Deloitte’s employment forecasts report has highlighted that the economy is stagnating, with the slowest growth seen since the early 1990s recession. This poor growth is evident through various indicators such as GDP, retail spending, and the number of business insolvencies. Deloitte Access Economics partner David Rumbens noted that the weak economy has now impacted the labor market, leading to a private sector hiring freeze.
The report predicts that unemployment, currently at 4.2 per cent, will peak at 4.5 per cent, resulting in 101,500 more Australians being unemployed in the new financial year. The retail industry, which saw a 0.8 per cent decline in employment in the previous financial year, is expected to experience a further two per cent drop this year. Similarly, the finance industry is projected to decrease by 3 per cent before stabilizing.
There are additional weaknesses in the labor market, including vacancies, job mobility, a decrease in average working hours, and rising job security concerns. Deloitte expects employment to grow by a mere one per cent this year, a significant decrease from the previous financial year.
Despite these challenges, there are some signs that economic conditions may begin to improve. Rumbens mentioned that the labor market typically lags behind broader economic performance by around six months. This means that while there may be emerging economic green shoots elsewhere, the labor market could continue to deteriorate with unemployment on the rise.
In conclusion, the Australian economy is facing significant challenges with slow growth rates and rising unemployment. It is crucial for policymakers and businesses to address these issues to ensure a more stable and prosperous future for the country.