A marked slowdown in global economic growth is now anticipated through 2023, according to the September 2022 edition of Deloitte Access Economics Business Outlook released yesterday.
The management consulting company says Europe and the United Kingdom are likely already in or very close to recession, while a recession in the United States looks increasingly difficult to avoid.
“Combined with weakening growth in China, likely recessions in major advanced economies on either side of the Atlantic set an ominous backdrop for the world economy in 2023,” it says.
Persistence price pressures, aggressive tightening of monetary policy, volatile financial markets and weakening consumer confidence are all factors.
Turning to the situation at home, Deloitte Access Economics Director and report co-author Cathryn Lee, said: “Overall, global economic conditions have deteriorated and 2023 will be challenging. But Deloitte Access Economics is not forecasting the local economy to slip into recession.
“A weaker global economy, a downturn in the housing market, and a more cautious consumer will weigh on Australian economic growth in the near term. But there are important positives as well.
“Inflation is expected to peak in the December quarter and – while remaining elevated – will gradually retreat through 2023. Combined with slowing economic growth, that will give the Reserve Bank an opportunity to follow a less aggressive tightening cycle than has been seen in other countries.”
Good news for homeowners – Deloitte expects only two more interest rate hikes in this cycle before the peak.
“At the same time, a strong labour market, rapidly improving net migration and firming wages growth means that Australia is in a solid position to weather the storm and avoid recession.”
In spite of the optimistic forecast for Australia, reducing spending and increasing savings where possible is always a smart strategy as is building an emergency fund that covers at least three months' living expenses.