Treasurer delivers grim economic warning with revised forecast

Treasurer Jim Chalmers has indicated more financial pain is coming, with a revised economic forecast revealing the major impacts hindering Australia’s growth.

Mr Chalmers will deliver a speech on Thursday in which he will announce the forecast for gross domestic product growth in 2022-23 will be revised down from 3.5 per cent to three per cent.

Growth is expected to slow further in 2023-24, at two per cent – down from the 2.5 per cent previously predicted.

The Treasurer said higher interest rates, combined with a global slowdown, would impact Australia’s economic growth.

“The headwinds our economy is facing – higher inflation at the top of that list, along with slowing global growth – are now reflected in the revised economic outcomes and forecasts,” he said.

Mr Chalmers said half a percentage point had been cut from growth for the last financial year, this financial year, and next financial year.

“It’s expected that real GDP grew by 3.75 per cent in 2021-22, instead of 4.25 per cent as was estimated pre-election,” he said.

“Forecasts are never perfect but these better reflect the economic circumstances our new government is now dealing with – compared with what was set out before the election.”

Mr Chalmers warned in the near-term inflation would get higher.

“Australia is outperforming much of the world but that doesn’t make it easier to pay the bills at home,” he said.

“(Inflation) will subside but not overnight. It’s been turbocharged by a decade of domestic failures on skills, on energy and on supply chains which just aren’t resilient enough.”