Australia expects unemployment rate to rise as global economy slows
12:34 am Sunday, July 16th, 2023
SYDNEY (Reuters) – Australian Treasurer Jim Chalmers said on Sunday that he expected the nation’s jobless rate to lift from near a 48-year low on the back of higher interest rates and slowing global growth.
“As the Reserve Bank forecasts and the Treasury forecasts have inflation moderating over the coming months, they do have a tick up in unemployment as well,” Chalmers told the Australian Broadcasting Corp.
Amid stubbornly high inflation, the unemployment rate in May edged lower to 3.6%, when analysts had expected a steady 3.7%.
The Reserve Bank of Australia (RBA) has said the jobless rate would need to rise to about 4.5% – still well below pre-pandemic levels – to bring the economy back into balance.
Unemployment was expected to lift “a bit as the economy slows as a consequence of higher interest rates and global economic uncertainty”, Chalmers said ahead of attending a meeting of Group of 20 (G20) finance ministers and central bankers in India with outgoing RBA Governor Philip Lowe.
The RBA this month kept the cash rate at an 11-year high of 4.10%, having lifted rates by 400 basis points since May last year, but warned that further tightening might be needed.
The decision came after June data from the Australian Bureau of Statistics showed Australia’s economy grew at the weakest pace in 1-1/2 years in the last quarter, while emerging signs pointed to further softness ahead.
(Reporting by Sam McKeith in Sydney; Editing by Jamie Freed)
