Jim Chalmers is warning of an economic slowdown and rising unemployment, less than two weeks out from a likely fifth rate hike for the year.
The Treasurer is making the remarks at a business forum in Sydney on Friday morning.
“Treasury is in the process of revising all the numbers for the mid-year update,” he said.
“Higher interest rates and higher inflation are likely to mean softer growth and slightly higher unemployment.
“We’re not immune from the consequences of two wars, both impacting almost every economy in one way or another, posing risks to global growth, pushing up global inflation, and pushing up borrowing costs.”
The Australian sharemarket puts a 62 per cent chance on rates being hiked on Melbourne Cup day in November.
Outlining the economic hit from the wars in Ukraine and Iran, “the largest economies” holding “much more debt”, and the “intense” investment in AI, Mr Chalmers said meetings throughout Asia in recent weeks highlighted Australia’s position.
“Over four days in three countries I met more than 40 chief executives and business leaders.
“The major focus was on oil prices and energy security, bond yields and borrowing costs, and capital flows.
“I heard the same message over and over: In a world of ratcheting risk, Australia is more and more reliable.”
Amid constant debate over whether government spending is driving inflation, Mr Chalmers alluded to his government’s apparent cooling effect on the economy.
“Our economy is growing faster than almost every G7 economy, and the IMF expects this to continue for at least five more years,” he said.
“That growth is overwhelmingly driven by private sector activity, as it should be. Private demand has picked up while public demand has eased.
“In fact, private demand growth tripled last financial year compared to the year before, while public demand growth halved.
“In annual terms, private demand is contributing four times as much to growth compared to public demand,” he said.
More to come