Australian Treasurer ‘optimistic’ despite forecast downgrade

Australian Treasurer Jim Chalmers on Tuesday said he is “still optimistic” about the country’s economy despite a downgraded outlook.

In its latest projections, the Organization for Economic Cooperation and Development (OECD) cut its forecast for Australia’s gross domestic product (GDP) growth in 2023 from 2.5 per cent predicted in June to 2.0 per cent, reports Xinhua news agency.

It projected that Australia’s economy will grow by 4.1 per cent in 2022, down from the 4.2 per cent it forecast in June.

The OECD report said Australia has “somewhat stronger growth momentum” than Europe and the US but that it is “projected to wane over the coming quarters, in part due to softer external demand”.

Chalmers, who will hand down his first federal budget next month, said the report highlighted growing economic risks.

“The OECD report shows the global economy is treading perilous terrain, with slowing global growth, rampant inflation, falling real wages, and extreme uncertainty,” he said.

“These challenges are intensifying, not dissipating, and Australia is not spared from this darker and more dangerous global outlook.

“Despite significant economic and budget challenges here at home, Australians should be optimistic about the longer term future of our economy and our country.”

According to the OECD, Australian inflation will average 6.1 per cent in 2022 and 4.4 per cent in 2023.

In response, the Reserve Bank of Australia is expected to continue gradually raising interest rates to a peak of 3.6 per cent in 2023.

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