Treasurer Jim Chalmers has acknowledged the economy is barely growing but does not expect Australia to go into recession as he defends the government's economic management.
Yesterday, it was revealed that in the first three months of the year, the Australian economy grew by just 0.1 per cent, bringing annual economic growth to 1.1 per cent. It is the slowest annual growth rate since December 2020 and the worst growth rate since the early 1990s recession, excluding the pandemic.
Jim Chalmers in Canberra yesterday.Credit: Alex Ellinghausen
It appears a few moments ago on Channel Nine's Today show, host Karl Stefanovic asked Chalmers if we're headed for a recession. Here's how he responded, edited for length and clarity:
Oh, not our expectation, Karl. We believe that the economy will continue to grow, but very gently. You know, those numbers we saw yesterday were very weak. You know, the economy barely grew in the first three months of the year. We knew it would be weak. And that was the case. And I think that rings true for many of your viewers as well, Karl. You know, people know that the economy is soft and that it's under pressure. And that's why the budget was very important. The budget is about fighting inflation, but also about helping people when the economy is soft.
Chalmers was then asked if immigration was the only reason Australia was not already in recession, as Stefanovic pointed out that GDP per capita had fallen. In response, Chalmers pointed to rising interest rates as the main handbrake on the economy:
Karl, there are a whole host of factors you can point to, without which growth would be even weaker. You know, the growth figure for the first three months of the year was 0.1 percent. So any contribution to that growth is welcome, but what we've seen over the last 12 months or so is the impact of these rate hikes on the system. The rate hikes started before the election and continued after. And, you know, we've talked about it before. This is putting people under a lot of pressure and it is also slowing down the economy. There are other factors as well. And so really, from our point of view, the most important thing is to fight that inflation without wrecking the economy and to provide that cost-of-living assistance in the most responsible way. And that's what we're doing.
