Australia should avoid slipping into a consumer-led recession, economist Matthew Peter told FINSIA’s latest webinar.
The QIC Chief Economist made the call during a 2023 wrap-up, pointing towards the huge build-up of excess savings households have amassed since the pandemic.
While recognising the cost-of-living crisis has left 5% of borrowers in distress, he said that inward migration and planned tax cuts would steer the economy away from falling into recession.
“We are sitting on $250bn in savings, which is quite a buffer,” he told the lunchtime session moderated by FINSIA VIC/TAS Regional Council Chair Steve Daniels F FIN.
Population growth is at its highest level and the Stage 3 tax cuts scheduled for next July will give enough stimulus.
“We are going to feel the pain. But households have got enough to stop the Australian economy going into recession,” he added.
The outlook, he said, would be similar to the slowdown following the Global Financial Crisis rather than the 1990/91 recession.
He suggested that part of the pain will come from a uptick in unemployment, as the RBA tries to balance intertest rates and inflation – and he predicted that the cash rate would remain above 4% throughout 2024.
The on-demand webinar will be available free to members here.