Australia is not headed for a recession: Chalmers
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The news: Treasurer Jim Chalmers has said he does not believe Australia is heading for a recession, and that opposition leader Peter Dutton has been “lying” about the issue.
The numbers: The comments come as almost $50 billion was wiped off the ASX as Trump’s tariffs came into effect on Wednesday. The Australian sharemarket closed 1.8%, with the S&P/ASX 200 index ending 135 points lower at 7,375, with 10 of 11 sectors in the red.
The context: During the Sky News Treasurers’ Debate on Wednesday evening, Shadow Treasurer Angus Taylor pressed Chalmers on whether or not he is expecting a recession. Taylor said Peter Dutton’s comments came in response to Chalmers’ “forecasting of interest rates”, when he suggested that investors had lifted their bets for a 0.5% interest rate cut at the RBA’s May meeting.
“It’s important to remind everyone that we expect the Australian economy to continue to grow, and Angus [Taylor] and Peter Dutton should stop lying about that,” Chalmers responded.
“The budget is in a much stronger position now than it was three years ago, and that’s because I’ve delivered two budget surpluses. Bottom line, the debt this year is $177 billion less than what we inherited. That’s saving $60 billion in debt interest over the course of the next decade…that gives us more room, if necessary, to respond to these difficult global conditions.”
The interchange comes amid Chalmers’ ‘pause’ in campaigning to address the impact of Trump’s trade tariffs on the Australian economy, with the Treasurer having scheduled meetings with Reserve Bank chief Michele Bullock and other regulators on Wednesday. Chalmers also met with leaders of the big four banks on Tuesday.
Earlier this week, Chalmers said Australia was in good shape to weather the tariff fallout and said claims from the Opposition Leader that “under Labor” the nation was headed for a recession were "reckless".
Concerns around the US trade tariffs are tied to the potential impact China could experience, which could have a knock-on effect on Australia. Trump ratcheted up levies on China by 50% on Monday, taking the US import fees on the country to 104%.
The RBA will be closely assessing the tariff fallout on Australia ahead of its upcoming rate decision in May.
What they said: "We're working closely with the regulators and financial institutions to ensure that everything possible is being done to safeguard Australians from this global volatility," the Treasurer said in a statement. "These escalating trade tensions are casting a dark shadow over the global economy but Australia's robust economy and budget puts us in good stead."
The sources: ABC, Bloomberg, The Australian, Sky News
